This Spotlight looks at how Scotland's prime residential property market is currently performing and our forecasts for the future. Download here.

More mainstream sales

House purchase activity across Scotland has been robust this year, with a 7% increase in transactions, led by a 10% increase in mortgage lending during the first six months of 2013 (see Graph 4). We expect healthy recovery in transactions as a whole during 2013.

Homes across Scotland’s cities are currently taking an average of 26 weeks to sell and have been doing so since 2011. However, properties launched on to the market this year at realistic prices are selling quicker (see Graph 3).

On a more local level, we are seeing continued strong performance in core central markets like Aberdeen City, Aberdeenshire, Edinburgh, East Renfrewshire and East Dunbartonshire and also secondary markets like Angus, fuelled by the ripple out effect from the strong Aberdeen market, as well as Midlothian and Renfrewshire boosted by new build housing which is selling well.

We have revised our forecast for house value growth across the UK between 2013 and 2017, in the light of low interest rates and the Government’s recent stimulus measures. The Funding for Lending scheme (FLS) is making a positive contribution to mortgage availability across the UK.

Furthermore, we estimate around 400,000 house purchases across the UK, and 30,000 in Scotland alone, over a three period, could be facilitated by the UK Government’s recently announced Help to Buy scheme.

The Shared Equity element, aimed at supporting the new build sector, has already led to 12,500 reservations in England in the first five months of the scheme. The Mortgage Guarantee element (due to start in January 2014) has the capacity to ease purchases across the UK over the next three years, assuming mortgage lenders have a moderate appetite for the scheme.

The scheme’s launch into an improving market has triggered concerns that Help to Buy will provoke another property bubble. However, given the high level of Scottish property on the market, its primary impact north of the border is likely to be increased demand, leading to modest price growth.

We forecast average values will rise by 1.5% this year in Scotland, against an original forecast of 0.0%, with the pace of growth picking up over the three year period of Help to Buy (see Table 1).

Taken from
Spotlight: Scotland's Prime Residential Property Marktet