It has long been the case that Scotland’s housing market hotspots are mainly to be found in the Central Belt, with its major cities of Glasgow and Edinburgh and their surrounding commuter belts. It is also of no surprise that the catchment areas around good schools in these areas prove to be the most attractive to working age adults.
The greatest numbers of these working age adults are also to be found in and around the Central Belt, with another hotspot in the Aberdeen area, in spite of the downturn in the housing market resulting from the slow-down in the oil industry.
Scotland’s housing market can thus be said to be driven by the lack of supply in these regions, a reflection of the situation throughout the UK as a whole.
In 2016-2017, other factors have played a role in housing supply and demand in Scotland, namely the replacement of stamp duty by the Land and Buildings Transaction Tax (LBTT) and Brexit.
The Scottish version of LBTT offers a different banding system to the rest of the UK to better reflect local house prices and it does appear to have had a slight impact on the sales of properties at the upper end of the market. However, this may also be due to the Brexit effect and the ensuing possibility of a second Scottish Independence referendum.
On the other hand, the LBTT rates on house sales of £400,000 or under are highly favourable to Scottish property owners.
Scottish property is attracting more top-end buyers from outside Scotland, helped by favourable exchange rates, another Brexit effect. In these uncertain times, investors - whether foreign or home-grown - are drawn to prime central hotspots, considered safe investments and good value for money.
In the meantime, it is new-build homes that are fuelling the housing market in Scotland. There is a huge demand for housing throughout the Central Belt, coupled with investment in property in both Glasgow and Edinburgh.
In many new developments, houses are being bought off-plan and this holds true for both first-time buyers and family homes, even in the £400,000+ price bracket. The Lothians are a major hotspot for high-value property sales, given the ease of commute into the capital.
Furthermore, with the opening of the latest Forth Bridge, the Queensferry Crossing, scheduled for September, the housing market in both Fife and Stirlingshire is likely to benefit from the easing travel opportunities towards both Glasgow and Edinburgh. A ripple effect may even be felt in Tayside.
Property prices and sales in these further-flung regions remain stable and, throughout Scotland, the residential market is undoubtedly at its strongest since the crisis period around 2008, with the number of transactions sitting 9% higher than the 10-year annual average.
Continued high rates of employment coupled with the progression in average earnings for Scottish households will see property prices continue to rise across the country, resulting in Scotland becoming the UK’s fifth best performing region.
Image courtesy of Transport Scotland - Scottish Government