May 2010 – Monthly Scottish Property Market Update
My last monthly property market update went out just before the General Election. Since then the political landscape in the UK has changed dramatically.
The big question for this monthly Scottish property market update is: what is happening in the property market today and how will the result of the General Election affect the property market in Scotland?
I’ve also put some tips in here about how to help your property stand out and to sell in what continues to be a very challenging market in most areas. I hope you will find it useful and engage in the debate!
HIPs Have Been Scrapped (But It Doesn’t Affect Us in Scotland!)
Home Information Packs have been scrapped by the UK government. However this legislation only affects England and Wales, not Scotland. In Scotland we introduced Home Reports on 1 December 2008 and they remain in place for the time being. It is up to the Scottish Parliament as to whether or not they will be scrapped and it has nothing to do with the Westminster government.
If you can’t be bothered reading the whys and wherefores of my thoughts then of course I am gravely and personally offended. However, I’ll give you a little clue: I don’t think that Home Reports will be scrapped. Furthermore, I dont’ believe that they should be scrapped on account of them having been one of the principal things that restored some confidence to the property market in Scotland. There you go, I’ve said it! There is a faction of lawyers at the moment which is against Home Reports, who have their large tubs out for everyone to see and who are doing their damnedest to make everyone hear them being loudly thumped. I (perhaps not entirely humbly) disagree with them. They probably won’t like that. I don’t care. I think that Home Reports are good for consumers, we exist to serve consumers, therefore they are a good thing. The end.
The Edinburgh and Lothians Property Market
I have to confess that, although I call this a ‘Scottish’ property market update, most of my ‘on the ground’ experience of the property market is in Edinburgh and the Lothians as that’s where MOV8 markets and sells most of its properties. I can of course regurgitate everything that I’ve read and heard about the wider Scottish marketplace but it’s not based on a breadth of actual experience of what is really happening and, as always, it comes to me through a filter of vested interests and agendas so I can never rely 100% on it unless I have seen it myself. What you get from my updates is, hopefully, as agenda-free an account of what is actually happening rather than what some PR agency says that one of the larger firms of solicitors or estate agents supposedly said about what is happening in the marketplace. With that disclaimer out of the way…
The general news is that mortgage lending is down and yet prices are up. Or down. Or up again. It depends on which newspaper you read on which particular day. Here’s my genuine experience of what’s happening…
- In Edinburgh and the Lothians, family homes (particularly more traditional-build ones with gardens) are like hens’ teeth and are selling in a matter of days with high demand and high competition;
- In Edinburgh and the Lothians, demand is also hugely area dependent: areas like Bruntsfield, Morningside, Stockbridge and the New Town are in demand, regardless of the type of property, just because they’re desirable areas to live in and properties are selling very quickly there too;
- First time buyer demand is still very low. This isn’t surprising as most statistics seem to be showing that lending to this sector is still massively down: in spite of some initiatives by some lenders to offer mortgages with less strict criteria, most first time buyers are still struggling to come up with deposits. As a result, outside of the traditionally high demand areas (examples above), demand remains very low and one bedroom flats in particular are struggling to sell. To sell a flat in this sector of the market, it has to be stunningly-presented: there are still first time buyers out there but they can afford to be very choosy!);
- I can only rely on media and word-of-mouth accounts for the rest of Scotland but it appears that Edinburgh and Aberdeen, traditionally strong property markets that have withstood previous slumps better than others, are faring better than Glasgow and Dundee, for example. More rural areas in, for example, Perthshire seem to be faring well too but again it totally depends on the sub-market within the local market: an attractive holiday home with land is going to be more in demand than a modern, two bedroom flat in a slightly more outlying area.
So What Should You Do To Make Your Property Stand Out From the Crowd?
Even if you have a property in an area of massive demand (Edinburgh’s New Town or Glasgow’s Kelvinside, for example) then ensuring that it is as well presented as possible will either increase the value or, in areas where demand is lower, will probably make the difference between whether it sells or not. How should you do that?
You can’t change its location so instead focus on the property itself: the following words should all spring to mind when a buyer is walking around your property: clean, crisp, fresh, bright, inviting, stylish, elegant, tidy. The following should not: needs work (unless it’s being sold as a development opportunity), smells funny, smells fousty, it’s a bit dark, it probably looks bigger with all this stuff taken out of it.
Don’t cramp viewers but do be helpful. Be polite to viewers and don’t get into an argument with them, even if they are a bit demanding or pushy. Get kids and animals out of the way, as much as practically possible, if you want to appeal to everyone: viewers are buying a property to suit THEIR lifestyle, not yours. Tidy up, make the beds and don’t use the bathroom or shower just before viewers arrive (amazing how many people do!).
And finally, when setting your price expectations, don’t read everything that’s printed in the Press: house prices have stabilised but there is a disproportionate number of larger properties selling and that is giving the appearance that property prices are rising faster than they are.
What Effect Will the General Election Result Have on the Property Market in Scotland?
Sorry to disappoint you if you were expecting anything other than a slight fudge at this point…!
I think it’s probably far too early to tell. There are going to be swingeing cuts to the public sector and that will probably have a disproportionately negative effect on Scotland as such a huge proportion of our population is employed in that sector. I haven’t heard anything proposed by either of the two parties in the coalition that seems to apply directly to property in such a way that it would have an obvious effect on the market (such as scrapping Stamp Duty or raising it massively).
At the moment the largest elephant in the corner of the room most probably isn’t actually in the UK’s control: the economic position in Europe. It appears that the Spanish banks are in a bit of a pickle. It appears that the Greeks are in a massive pickle. It also appears that this could bring down the Euro because the Greeks aren’t playing ball with the powers that be in the EU. And very shortly it will probably appear that the Spanish bank pickle has taken steroids and overtaken the Greek pickle in our new pickle race because the Spanish economy was probably even more dependent on property than the UK’s was (and if you thought the price drops in the UK were bad, you should see what has been happening in Spain for the last couple of years!).
With all of that uncertainty around the EU, it’s difficult to focus solely on whether plans to raise the tax-free income tax threshold to £10,000 is really going to make much difference. What we do know is that people and markets don’t like uncertainty and I fear that in the coming months we’ll see job losses, rises in the cost of living, rises in interest rates (there have already been loud calls for this) which move us from a slightly artificial position at the moment where those who are in work and have a variable rate mortgage are actually better-off than they were a year ago. Time will tell but I’ll certainly keep you updated if I can.
We’d love to know what your opinion on all of this is, please add any comments you have below.
Managing Director, MOV8 Real Estate