World events can have a real and lasting impact closer to home

As the economy continues to recover, the property market continues to show a marked improvement on the dark days of the recession.

2014 was a year of unprecedented disruption characterised by the football World Cup, tightening of the lending criteria by banks and building societies, Commonwealth Games, The Ryder Cup and lastly, of course, the Referendum.

All of these have had an impact on the market in one way or other. The Referendum in particular almost brought the property market to a halt.  Irrespective of political views the public were undoubtedly caught up in the emotion of the campaigning and took their eye off the property ball particularly during what is traditionally a strong month (September) for the market.

Nothing impacts on the market more than uncertainty. The world in which we live delivers news 24/7 – bringing life-changing news instantly into our homes and lives. When in previous years would you imagine riots in Athens hitting viewing figures in the Scottish residential housing market? But hit them, they did.

The slightest negative news story about the economy or the state of the country, injects a degree of uncertainty into the market. The media fuel the impact of negative news stories, often predicting how it might impact on prices and confidence.

Perhaps the best, most recent example is the announcement of changes to Stamp Duty or LBTT as it’s formally know to be known – from Mr Swinney (on two occasions as we know now) and Mr Osbourne. They have been welcomed in many quarters but also less well received in others.

Early signs in 2015 – sparked by the Stamp Duty changes – suggest that those with property valued beyond £325,000 are looking to bring their house to the market early in what is regarded as an unseasonal time. Generally houses with attractive gardens tend to target the brighter months from spring onwards to take full advantage of any potential uplift an attractive garden in full bloom might give. The balance of how much of an impact the initial LBTT predicted threshold percentage would have in terms of buyers unwillingness to pay the uplift against the added value of a nice garden is an interesting one to ponder.

Given the readjustment of  LBTT percentages, I expect many sellers in the middle market to hold off until the brighter months thereby maximising the potential of house and garden. First time buyer activity will increase releasing first time sellers to move up the market. This will create a ‘snowball’ effect throughout the market increasing demand and therefore nudging up prices.

The other big influencer in 2015 will be the General Election. It will undoubtedly slow the market down but nothing like the ‘standstill’ the Referendum produced. Elsewhere, with oil prices and inflation low we are unlikely to see any significant movement on interest rates with some commentators suggesting they will not increase for at least two years.

All in all, it points to a very optimistic – and interesting – year for Scotland’s property market.

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For More Information Contact:
Matthew Gray
Mobile: 07730 0010153
Direct Dial: 0131 516 5367
Email: mgray@gilsongray.co.uk

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The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.