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The Scottish property market tipped to fly in 2021

THE logistics and residential real estate sectors of the property market in Scotland have been forecast to “dramatically outperform” in 2021, when Brexit will quickly fade as a major issue after five fractious years, a new report declares.

The dramatic shift to online shopping during the pandemic has led to investors flocking to put money into property in the logistics sector.

Property firm CBRE expects that trend to continue next year, when it predicts that funding will become available in Scotland for investment in additional warehouse space.

According to CBRE, the pandemic has underlined the essential role of the logistics sector in sustaining the flow of goods. It anticipates that the year ahead will see occupiers focus on building more resilient supply chains, increasing capacity and diversifying suppliers to safeguard against future disruptions.

CBRE says £174 million has been invested in industrial and logistics property in Scotland so far this year. While this is currently down on the £185m invested last year, it is expected the 2020 total will reach the five-year average of £200m if deals under offer and likely to conclude before the end of the year are taken into account.

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David Reid, associate director of CBRE Scotland’s industrial and logistics team, said: “We expect 2021 to be another strong year for our market in Scotland. The incredible take-up during 2020 has resulted in critically low stock levels and with continued strong demand we urgently need new speculative development to meet the future needs of occupier requirements. We are working with a number of developers to plug this shortfall in supply.”

CBRE’s 2021 UK Real Estate Market Outlook forecasts that the logistics and residential sectors will achieve significant growth next year, although it notes that a weaker economy will lead to lower and even negative rental growth.

The agent says there has been a reduction in overall real estate investment in Scotland of around 50 per cent this year so far, dipping to £1.06bn from £1.99bn in 2019 amid continuing Brexit uncertainty. Next year, though, it expects investment to rebound to £1.5bn, taking it closer to the five-year average of £2.1bn.

Steven Newlands, executive director in CBRE’s investment team, said: “Demand is expected to come from a wide variety of sources, including sovereign wealth funds, overseas institutions and European funds. Overseas private investors are also expected to be particularly active. “For now, investors are focusing on the winners from the pandemic: the logistics and residential sectors and core assets with near-guaranteed income. In 2021 we expect this to continue until the vaccine is rolled out.”

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The report flags expectations of a gradual recovery in the office market, with investment and take-up expected to steadily recover after a difficult start to the year. CBRE notes that UK office yields will remain stable despite capital values falling by around 11 per cent over 2020 and 2021.

While significant doubts remain as to whether the UK and European Union will agree a trade deal before December 31, CBRE expects the Brexit issue to gradually fade. It said next year will see a recovery in the commercial property investment market because of record low interest rates and an “abundance of capital looking for a return”. This year the market has stalled amid the uncertainty caused by the pandemic, as restrictions have limited the ability of investors to travel to inspect sites. But Mr Newlands said: “These concerns, as well as the restrictions, will ease over time for some asset types as the occupier market recovers.”

CBRE hailed the resilience of the residential market, and expects it to perform strongly in 2021, supported by “tax incentives, resilient demand and lagging supply.” Mr Newlands said: “Despite Covid-19 restrictions, investment into the residential sector was strong in 2020. There is a high level of equity targeting the build-to-rent sector and lending also remains highly competitive.”

Miller Mathieson, managing director of CBRE Scotland and Northern Ireland, said: “In Scotland we will have many opportunities and challenges in common with the rest of the UK. In particular we will see significant activity in the logistics sector as values improve and new speculative development becomes viable. This is the favoured sector of investors and Scotland still has major growth potential. Similarly, I think we will, at last, see Scotland embrace all the different forms of residential investment around affordable housing, build-to-rent and co-living.

“Our biggest challenge will undoubtedly be in the retail sector with the continued growth of online sales and the increasing number of CVAs and administrations.”

By Scott Wright

Source: Herald Scotland

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Bank of Scotland sees huge rise in mortgage applications

Online mortgage application enquiries to Bank of Scotland have jumped 75% in the past week, ahead of the Scottish property market emerging from lockdown.

The imminent reopening of the property market means new lending appointments are also up, with an increase of 470% on the previous week.

Bank of Scotland data revealed that the majority of these enquiries and appointments are from first-time buyers.

As movers navigate the post-lockdown housing ladder, many will be looking for help on what this now looks like and what it means for them.

“It has left many people at a loose end”

Graham Blair, Mortgages Director, Bank of Scotland, said: “With the housing market slowing in the last few months, it has left many people at a loose end, whether that involved delaying plans to buy, extending rental agreements, or having to move in with relatives or friends.

“As Scottish estate agents look to reopen their doors, we are seeing an increase in mortgage applications and new lending appointments as more people want to get moving.

“Our branch-based advisers are also there to help people take the next step, but there’s plenty that people can do to get the ball rolling in the meantime.”

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Bank of Scotland advice on coronavirus home buying

First-time buyers

“If you are taking your first step on the property ladder, you should have a look at the First Home Fund which may be an option in helping you purchasing your first home,” the Bank said.

Start the ball rolling

The quickest way to find out how much you can borrow will be by checking online tools and calculators which can help you within minutes.

Keep documents up to date

Before speaking to a mortgage adviser, make sure all your income details, bank statements and pay cheques are up to date and you have them prepared before the first meeting.

The more accurate information you can provide from the offset, the smoother the process will be.

Be realistic

For those selling, there will be lots of speculation over the coming weeks about house prices going down, but we should remember we are in unprecedented times.

With market activity currently almost at a complete standstill, and therefore a more limited number of transactions, it will take time for the true trend to emerge.

Consider looking at a trusted house price website as well as talking to a number of local estate agents who can share local expertise on the area.

What if I have been furloughed?

“From a Bank of Scotland perspective,” it said, “our conditions largely remain the same for those applying for mortgages and we recognise furloughed income.”

Many people have changing circumstances which is why it is important to bring all the latest information with you.

By Conor Marlborough

Source: Scotsman

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Housing market starts to reopen in Scotland as lockdown eases

From Monday 29 June, restrictions on housing moves will be eased in Scotland as part of the easing of its lockdown measures.

This will allow valuations and viewings to take place, and marks the initial stage in the reopening of the Scottish housing market.

This development in Scotland follows a similar move to ease lockdown on 19 June in Wales, which saw the government allow viewings to take place in vacant properties, and to ease restrictions on house moves where a sale has been agreed, but not yet completed.

In England, it has been more than a month since equivalent changes were made on 13 May.

First Minister Nicola Sturgeon, said: “The sacrifices that have been made – and I know how hard and at times painful they have been – have suppressed the virus.

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“They have also protected the NHS, and have undoubtedly saved a significant number of lives.

“They have also brought us to the position where we can now look ahead with a bit more clarity to our path out of lockdown, and I hope details announced today will provide people and businesses with more certainty in their forward planning.

“But let me be clear that each step on this path depends on us continuing to beat the virus back. That is why we must do everything in our power to avoid steps being reversed.

“The central point in all of this is the virus has not – and it will not – go away of its own accord. It will pose a real and significant threat to us for some time to come.

“Maintaining our progress also means all of us abiding by public health guidance.

“Wearing face coverings in enclosed spaces, avoiding crowded places, washing our hands and cleaning surfaces regularly, maintaining physical distancing, agreeing to immediately self-isolate and get a test if we have symptoms – all of these basic protections matter now more than ever as we all get out and about a bit more.”

A statement from the Welsh First Minister, Mark Drakeford MS, said: “This package marks a significant unlocking of the regulations and, for many aspects of daily life in Wales, we are moving into the amber phase of our traffic light system.

“We have been able to do this because of the actions everyone in Wales has taken to date in complying with the stay-at-home and stay local rules.

“We need everyone to continue to take steps to protect themselves and their loved ones as we find a way to live and work alongside coronavirus.

“This means working from home wherever possible, maintaining social distancing and frequent handwashing.

“For some people it may mean wearing a face covering in certain situations, for others it will mean continuing to shield.

“I want to thank everyone for everything they have done so far. Together we can keep Wales safe.”

Mark Hayward, chief executive at NAEA Propertymark and David Cox, chief executive of ARLA Propertymark, said: “It’s great news for consumers and the industry in Scotland that the property market is reopening on Monday.

“Whilst it is not a return to normal, the new guidelines will allow members of the public to view, purchase, rent and move into new properties…reinvigorating the housing market and boosting the economy.

“Of course, safety is paramount, and we encourage all agents to follow the Propertymark guidelines on property viewings and moves closely to protect themselves and others.”

By Jessica Bird

Source: Mortgage Introducer

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RICS: New buyers looking for green spaces as Scottish property market prepares to open

Following the reopening of the housing market in England May 13, the May 2020 RICS Residential Market Survey unsurprisingly saw a slight improvement in the outlook for sales over the coming twelve months across the UK as a whole.

As the housing market in England started to get going, the UK headline net balance for new buyer enquiries moved from a record low of -94% in April, to post a reading of -5% in May.

Activity metrics though did not see meaningful changes in Scotland, Northern Ireland and Wales, where restrictions on estate agents were not removed in May.

In Scotland, the indicator for new buyer enquiries remained close to a record low of -81% and the indicator for newly agreed sales was at similarly low levels of -84%.

However, Scottish respondents were less pessimistic regarding the outlook, with a net balance of -10% recorded for sales expectations over the next three months, likely to be influenced by an expectation that restrictions on the market will be lifted. And 12-month sales expectations turned positive (moving from -18% to +10%) for the first time since February.

In an extra question included in the May survey, as housing markets either opened or prepared to, contributors were asked for their views and for information on what is coming up when speaking to buyers, regarding potential shifts in the desirability of certain features of properties over the next two years (owing to recent events).

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81% of respondents across the UK felt that there will be an increase in desire for properties with gardens or balconies; 74% predict an increase in demand towards homes located near green spaces; and 68% are of the opinion that properties with greater private and less communal space will become more desirable.

At the other end of the scale, 78% of respondents sense there will be a fall in the appeal of tower blocks and 58% feel properties located in highly urban areas will be less enticing. Interestingly, the majority expect no change in the desirability of homes located near transport hubs.

Hew Edgar, head of UK Government relations and city strategy, said: “As Scotland eyes up the highly anticipated reopening of the housing market, potentially next week, this month’s survey feedback provides valuable insight that can inform the Scottish Government and developers of new housing requirements. It is clear that post-lockdown buyers are beginning to reappraise high-density living and looking for more space.

“Space inside their future homes and outside. What is also clear is that the Scottish workforce is looking to spend more time at home, and this will inevitably increase bills for owner-occupiers, and tenants in both the private and social rented sectors. As such, the Government should look at ways to incentivise the repair, maintenance and improvement of existing properties as a means to ensure the health and wellbeing of individuals working from homes in Scotland, as well as restricting a possible increase in fuel poverty.”

Alex Inglis MRICS of Galbraith Group in the Scottish Borders, added: “Little sales activity has taken place during the lockdown but selling clients are generally still keen to get things under way when the lockdown is eased. Potential buyers are generally still hoping to move. There is particular demand for rural and village / small town properties.”

Looking at some of the other regular indicators in Scotland, the indicator for prices over the last three months moved from a net balance of -20% in April to -14% in May. And near-term price expectations moved from -68% to -60%. Instructions to sell remained firmly in negative territory, with 100% of Scottish respondents saying that the number of new instructions from vendors fell last month.

Commenting on the UK picture, Simon Rubinsohn, RICS chief economist, commented: “Following the reopening of the housing market in England, pre-Covid sales that were in the pipeline are now largely going through. This is encouraging but it remains to be seen how sustained this improvement will prove. Much will inevitably depend on the macro environment and, in particular, the resilience of the jobs market as the furlough scheme unwinds. For the time being respondents to the survey see the trend in transactions being broadly flat.

“Alongside this, there are already signs that those looking to buy a house are responding to the conditions created by the pandemic by seeking out properties with gardens or balconies and nearer green space. These and other similar features are likely to increasingly command a premium over higher density urban locations according to respondents to the survey.”

Source: Scottish Housing News

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Property market enjoys 12-year high for December prices

House sales in Scotland reached a 12-year high in December, according to the latest property figures.

The increase – recorded by estate agent Aberdein Considine’s Property Monitor report – has been linked to a strong first-time buyer and new build market.

Figures show that, across Scotland, more than 10,000 homes changed hands in December, the highest figure for the month since 2007 and the credit crunch.

This was a 15 per cent increase on November’s figure and the highest single month of sales recorded since October 2018.

In the last three months of 2020, East Dunbartonshire saw the biggest increase in transactions, up 24% on 2019, while Aberdeen and Glasgow also enjoyed boosts of 10% and 1.6% respectively.

Douglas Telfer, Property Partner at Aberdein Considine in Glasgow, said the figures suggest that the market is no longer as seasonal as it used to be.

He said: “You have to go back to December 2007, before the global credit crunch, to find a higher month of pre-Christmas property sales.

“It used to be that you didn’t get many sales close to Christmas, but now that’s no longer the case. The market is showing signs that it is no longer seasonal.”

Mr Telfer claimed that some of the sales could be down to a “Boris bounce” following the general election result on December 12.

However, Faisal Choudhry, director of residential research at Savills, said the deals being finalised in December would have been agreed months before the vote.

He said: “We’ll see the effects of the general election in the next few months, in the first quarter of 2020.”

Mr Choudhry added that the December high was not surprising given the relatively steady growth in the Scottish market over the last three years.

He said: “Scotland has remained relatively unaffected by the recent political uncertainty compared to other regions of the UK.

“In Scotland transaction numbers have steadily grown, whereas other UK regions have seen a significant drop in transactions since the EU referendum in 2016.

“Uncertainty is built into our market because we’ve been witnessing uncertainty long before the EU referendum, we’ve had the Indyref back in 2014.

“I’m not surprised that we’ve had a strong December in terms of sales, it’s been a continuing theme for the last three years, helped by growth in the new build market.”

The statistics from Aberdein Considine show that total sales in Scotland reached £18.7 billion – £550 million more than 2018.

East Dunbartonshire recorded the highest average price rise in the last quarter of 2019, with an increase of 9.5% to £263,291. making it the third most expensive place to live in Scotland.

The most expensive location was East Lothian which overtook Edinburgh by around £2000, with an average house price of £267,905.

In Glasgow, the average price increased by 1% to £163,874 and the city recorded 3290 home sales – the highest number in Scotland.

Mr Telfer said: “Glasgow continues to be hugely popular, especially with first time buyers, and with office developments going up rapidly this is likely to draw in more people who want to live and work here, and enjoy all the city has to offer.

“As we head into the spring market, there is every sign that the wider trend in Scotland will continue, thanks largely to an injection of first-time buyers using new shared equity schemes.”

Mr Choudhry also said that there has been an increase in the £200,000 to £750,000 market in Scotland due to price growth, while property sales of £1 million and over had also reached a 12-year high.

“Looking ahead what Scotland needs is more supply in the second hand market and realistic pricing has to be key,” he added.

The Property Monitor report shows that in total in Scotland, sales increased in 25 out of the country’s 32 local authority areas.

First-time buyers accounted for 50% of mortgaged property purchases last year, with up to 6,000 more are expected to take advantage of the Scottish Government’s new First Home Fund in 2020.

The shared equity scheme gives buyers up to £25,000 towards the cost of buying a home and is forecast to be a driving force in the Scottish market this year.

However, Aberdein Considine warns that new entrants will still face the same old obstacles as they step onto the property ladder for the first time –rising house prices.

By Victoria Weldon

Source: Herald Scotland

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Glasgow leads the way as competition for development land drives values across UK

The UK residential land market is reflecting the shape of the housing market, as values fall in central London but continue to rise in other regions, with Scotland the standout performer, according to international real estate adviser Savills.

Across the UK, greenfield and urban land values have grown by 1.9% and 6.9% respectively over the past year, albeit values remain 13 and 23% below their pre financial crisis level.

Growth has been supported by the strength of the Scottish land market, where annual growth stands at 6.0% and 6.2% respectively and greenfield values rose 1.0% in the last quarter alone, and urban land values by 2.5%.

A scarcity of developable sites in Scotland’s most in-demand locations, particularly in and around Glasgow, has led to increased competition for land, underpinned by house price growth of 7.7% year on year, well ahead of the 3.8% UK average.

Jamie Doran, Savills development director, said: “A strong Scottish housing market, particularly in Glasgow and Edinburgh, has fuelled demand for well-located development sites: the key challenge is the availability of developable residential land in these areas.  The lack of supply of sites with planning consent is driving value. Value rises are greatest in prime hotspots within the city, ie the south –side of the city and West End, but also in the city centre where there a number of new developers entering the market.”

Emily Dorrian of Savills Research said: “The Scottish Government’s More Homes Policy is looking to deliver 50,000 new affordable homes by 2021, supported by increased access to grant funding. This is encouraging registered social landlords and local authorities to become more active within the development market.  Further, the Help to Buy programme in Scotland is supporting the private sector in delivering units up to £200,000, a key first time buyer threshold.

“North of the Border, developers also do not have access to the same suite of infrastructure funds to support the development of land where significant remediation or infrastructure is required. This, along with planning consent, is constraining the delivery of housing at certain sites in Scotland.”

Source: Scottish Construction Now

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Scottish property market best performing in UK

It may surprise many to learn that the Scottish property market is the best performing in the UK over the last 12 months and currently on a month by month basis. Annual growth of 5.6% in the 12 month period to April 2018 is well ahead of England at 3.7% and Wales at 4.4%. The average property in Scotland is now worth £148,952, in Wales the figure is £156,495 with England topping the table at £243,639. If we look at London by itself, as London is effectively a stand-alone property market, house prices now average £484,584 which is just 1% up on the 12 month period to April 2018.

MONTH BY MONTH GROWTH

It is interesting to see that Scottish property prices are currently outperforming the rest of the UK on a month by month basis. The current growth rate in Scotland is around 2.5% which compares to just 1.1% in England and 1.6% in Wales. While many will point to a period of underperformance by the Scottish property market, leading to this catch-up situation, it will be interesting to see whether this trend does continue. At the moment the Scottish government is at loggerheads with its UK counterpart in relation to Brexit and additional powers that devolved parliaments will welcome when the UK eventually leaves the European Union on 29 March 2019.

HOUSE SALES FIGURES WELL DOWN

It is worth noting that there has been a significant reduction in the number of properties sold over the last 12 months. The February 2018 figure for England shows a 15.4% reduction on the same period 12 months ago. London figures for the same period are down 23.9% with Wales showing a fall of 8.6% in the number of transactions. In the 12 month period to January 2018 the number of Scottish property transactions fell by 7.4%. Transaction numbers fell by 10% in the first three months of 2018 in Scotland thereby the comparable February 2018 figure is likely to be nearer 8%.

LACK OF HOUSING STOCK

There is no doubt that Brexit is causing problems for the UK economy and the UK property market. Whether the ongoing reduction in transaction numbers is wholly as a consequence of Brexit is debatable. There is also the issue that a lack of suitable housing stock is creating demand for any stock available, pushing prices higher, and creating a potentially false market. The reality is that many people have concerns about Brexit but in the long term many see benefits. As a consequence, the ongoing softening of the UK property market as a whole does not seem to be prompting a rush to the exit door and a flurry of new housing stock onto the market.

CONCLUSION

If Scotland was to gain independence then the eventual goal would seem to be re-joining the European Union and the single market. While this may be some way off, and independence is by no means certain, the Scottish property market could be an interesting long-term play on the long-term success of the European Union. While politicians continue to bicker the fact is that the democratic will of the UK electorate has spoken. The UK will be leaving the European Union, trade deals will have to be struck on a one by one basis and nobody quite knows how this will impact the UK economy in the short, medium and long-term. As a consequence, it seems that many people have decided to retain their properties for the time being rather than sell them into a “buyer’s market”.

Source: Property Forum