Many have been surprised to discover that the property markets in Scotland and Northern Ireland are showing renewed signs of life. These markets have traditionally been overshadowed by London and the Southeast. Brexit has been the catalyst for change in the UK property market so far, but what else is at work?
A Royal Institute of Chartered Surveyors (RICS) survey spotlights ongoing price growth for properties in Scotland and Northern Ireland. While London and the Southeast remain uncertain, it appears that one may expect more improvements in Scotland and Northern Ireland.
Value for Money
When house prices rise, markets beyond London and the Southeast have traditionally been left behind but this trend appears to be changing. While some market watchers believe that this is only a temporary departure from the norm, it is hoped that the difference between North and South will grow smaller.
One recent problem has been over-emphasis on capital gains. The UK business hub effectively exists in London and the Southeast, so these regions attract more investment and employment opportunities. When post-Brexit uncertainty causes the economy to slow down, business is impacted. One effect of this sentiment change is a reduction in wage inflation although records suggest that unemployment in Britain is at an all-time low.
Scotland and Northern Ireland
While the value for money factor puts Scotland and Northern Ireland in good standing right now, what does the future hold? The SNP government is pushing for independence in Scotland and Northern Ireland appears to be a pawn in the power struggle between the UK government and the EU. While it’s possible that weak prices in the past have made both markets more affordable, it’s also possible that the 2008 financial crash taught investors a lesson.
Many have withdrawn from the buy to let market in the wake of the government’s pursuit of property investors and subsequent tax increases. There are still areas throughout the country where property remains unaffordable to both first-time buyers and those looking to ascend the property ladder. As a result, the pressure is being put on rents due to the short-term drop in buy to let investment and the increasing number of people who are looking for private lets.
Growing competition for private sector rental properties, with many areas lacking badly-needed social housing, has resulted in improved returns even during these challenging times. While raising taxes make it understandable that many people have given up the buy-to-let market, is this the sensible thing to do?
First-time buyers still need help from short-term incentives and government schemes to get a single foot on the property ladder. There is increasing mobility in the employment market and therefore a need for more temporary rental accommodation. Austerity has left local authorities struggling to cope with slashed budgets, resulting in fewer social housing options. This all supports the goals of long-term buy-to-let investors who are likely to realise greater rental income for the time being.