What to expect from the Scottish property market in 2021
2020 was certainly an unpredictable year for all of us and the Scottish property market was no exception! The mixture of international lockdowns, ongoing Brexit negotiations and economic insecurity meant the market outlook was incredibly uncertain. Defying the odds, however, 2020 witnessed unprecedented growth and resilience from Scottish property, with the current pipeline of enquiries for both selling and buying remaining strong. With concluded EU negotiations creating more certainty and COVID-19 vaccines signalling some return to normality in 2021, there are many reasons to be hopeful for this year too. Industry experts predict that Scotland’s residential property sector is set to dramatically outperform in 2021 so what might we expect from the year ahead?
What’s the picture for the start of the year?
2021 has kicked off with a bang, because despite current lockdown restrictions, the Scottish Government has continued to permit house moving activities, as long as proper precautions are followed. This has been great news for the sector as a whole, keeping momentum progressing on sale transactions and avoiding a stalling or crash.
Last year, listings in the Central Belt surged between 50% to 200% higher than the same period in 2019. Experts forecast steady increases in completions for the year ahead in line with economic recovery and predict that average asking prices will continue to rise for the year ahead.
Whilst a certain level of economic uncertainty is to be expected, the nation’s ongoing housing needs are expected to outweigh any insecurity. A robust 4% house price growth is predicted for 2021, but prices are set to rise at a slower pace than the previous year which finished on 6.6% up on 2019.
How might borrowing and taxation impact the property market?
Cheaper mortgage rates and the wide range of mortgages available for those with smaller deposits leave a substantial amount of scope for price growth during 2021.
The LBTT break is due to expire on 31st March, but whilst this has resulted in some concerns for the summer property market, first-time buyers will remain largely exempt from LBTT. Since 2018, first-time buyers in Scotland have benefited from relief on LBTT (which effectively raises the starting threshold for first-time buyers from £145,000 to £175,000), which alongside measures to increase housing supply, has made it easier for people in Scotland to buy their first home. In addition, the potential saving of £2,100 under the LBTT holiday in Scotland was considerably less decisive than the £15,000 reduction in England for a house costing £500,000. This means that when the Scottish tax-break ceases, it is predicted to have less of a negative impact on the property market as a whole.
What are Scottish home buyers looking for in 2021?
Whilst taxation holidays certainly supported demand during 2020, a recent UK-wide survey by Zoopla found that 44% of movers were not heavily influenced by this. Rather, buyers were largely motivated by the need for more space and a better location. Scotland is no exception to this trend, with the search for more spacious accommodation and larger gardens set to continue for 2021.
With professionals working from home, the daily commute is no longer such a deciding factor in the homebuying process, and many are willing to move further afield to find their dream property. This means that the demand for houses with additional internal and external space is set to continue faster than for flats in 2021. Scottish vendors hoping to sell a house may therefore be at an advantage in current market conditions.
Overall, the ‘once-in-a-lifetime’ reassessment of housing needs prompted by the pandemic has defied expectations and resulted in strong levels of demand across Scotland’s property sector. With greater levels of certainty expected in terms of political, economic and public health developments, 2021 is set to continue this growth trajectory – making for an exciting year for the Scottish property market ahead.