The arrival of the latest set of market statistics for Scotland from the Registers of Scotland (RoS) for Q2 2021-2022 show continued growth, but are we out of the woods quite yet? There were concerns last year that the pandemic would have a huge impact on house values causing negative equity. Some anticipated a reduction by as much as 35%. However the market has shown itself to be robust with an incredible increase of 9.2% of the average house price. Low mortgage rates and good availability of finance have been a contributory factor.
Whilst the market basically ground to a halt from April to June 2020 we have since witnessed a remarkable recovery and this has continued throughout 2021. Value growth of 9.2% is a headline grabbing increase but the key indicator of market performance is the number of transactions. In the first half of the year nearly 58,000 sales were recorded compared to just over 30,000 in 2020. Although the year on year figures show eye watering increases we all know why.
However, when we go back to 2019 sales were just below 55,000 for the same period, record levels of sales have been achieved this year despite a widely reported supply shortage. Statistics would indicate that it is really the demand side that has changed most dramatically causing a continued shortage of available property on the market. Closing dates in the market are ever present and look to continue throughout 2021.
The value of sales in the last quarter is 24.7% higher than the five year average in Scotland showing the resilience of the property market. The prime and country house market has come alive and demand continues to outstrip supply across all price ranges.
There is a well reported demand for country living, with gardens and amenity space at a premium and home or hybrid working the key requirement for some. The country house market continues to have seen the biggest change since lockdown. That being said, with around26% of all residential sales within Scotland’s seven cities it is clear there is still a strong city market.
Properties are selling in record time, in excess of Home Report values and this trend looks to persist for the foreseeable future continuing to drive values upwards beyond inflation. However, it is likely that some economic and financial pain will need to be reflected in the market at some stage and the inflationary pressures we are starting to see maybe the first indicator. A possible increase in the Bank of England base rate next year may start to have an impact, squeezing affordability. The resilience of the market never fails to impress and I am expecting 2022 to show that again.