Scotland’s property market has been frozen due to lockdown over the last 10 weeks – with many wondering how it will look in the near future.
Dr John Boyle, a housing economist at Rettie & Co, has led research into how the housing market may look when it reopens in a new forecast.
The firm examines the industry by looking at the transactions and prices during previous market trends, such as the financial crash in 2008, along with current available data from the first quarter of 2020.
The Scottish Government announced Phase One of lockdown would include “preparing for the reopening of the housing market” – with firms expecting the sector to restart around mid-June – however, this is of course all dependent on the government’s review of lockdown on June 18.
Apart from emergency transactions , sales throughout April and May were close to zero – with a good part of June expected to be lost too.
He estimates that initially sales will be slow and “fairly similar to February,” which is traditionally the lowest point on the calendar as the housing market emerges out of hibernation.
He said: “We have to keep a close eye on two things: Lending and unemployment. We don’t have a crystal ball and you’ve got to be prepared for changing circumstances.”
Demand has been greater than supply in Scotland, due to a lack of new-build property up major cities with a high migration inflow. People are also more likely to stay in their houses for longer – resulting in a lack of churn of stock. Young people especially are more likely to rent privately due to lack of affordability as well as lifestyle choices.
The government furlough scheme has acted as a cushion to protect jobs and the economy during the pandemic, and has been extended until the end of the year.
Unfortunately, it’s predicted that unemployment will rise after lockdown.
“Furlough is limiting mass redundancies and it has been extended until the end of the year, but it should keep a lid on distressed sales, for now.
“Because interest rates have remained low and are likely to stay there, in fact the base rate has fallen further since lockdown, mortgage rates should also stay low.”
Though there may be some bargain properties to be clinched after lockdown, there may not be as many as buyers hope.
The lower levels of transaction will act to support house prices – with a market which is already in “excess demand.”