Rettie: Significant drop in housing transactions expected but average prices should be more stable
Despite the current uncertainty in the Scottish housing market caused by the COVID-19 pandemic and a significant drop in transactions, average prices are expected to remain stable, according to Rettie & Co.
In its Spring 2020 forecast, the property specialists said transactions activity is likely to fall by 20-35% in 2020, principally due to the lockdown period and its aftermath. Rettie is not anticipating a return to 2019 trading levels until at least 2022. However, a steeper recovery is expected than after the 2007/09 housing market crash, when the market remained depressed for around five years.
House prices should be more stable, it added, in part due to the reduced level of transactions but also continuing low interest rates and government support packages preventing a surge in distressed sales. Rettie is now forecasting a reduction in average prices of up to 5% this year, with modest growth returning after this.
These forecasts will be kept under review as the wider economy and society adapts to the ‘new normal’. Unemployment and lending levels will be the key bellwethers in the market and changes in these may change forecasts.
Dr John Boyle, Rettie & Co’s director of research & strategy, said: “Our 2020-22 forecasts demonstrate the impact of the global pandemic on the housing market. Transaction activity is almost negligible just now and the market will not reopen in Scotland until the lockdown is over.
“Even after this, requirements such as social distancing will continue to have an impact and it is difficult to see a return to normality for some time. Prices should be more stable if a lid can be kept on distressed sales. The housing market will still function post-lockdown and firms like ours will adapt to serve customers in new ways.”
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