Property Market Forecast 202221 Mar 2022
Few could have predicted the year the Scottish property market experienced in 2021. Like 2020, it was unprecedented– although in very different ways.
After the lockdowns, activity levels soared across the country as homeowners and those looking to get onto the property ladder tried to make up for the 18 months which saw millions of lives and property growth stagnated. Buyers also had to take a variety of new home requirements into account. This demand was unlike anything we’d ever seen before and sparked the biggest spike in UK house prices in fourteen years, as well as monthly rent increases as landlords looked to recuperate lost income.
Predicting what to expect for the rest of 2022 is therefore a tall order, but we are seeing trends carry over into 2022 and some new ones beginning to form.
Firstly, demand for property in Scotland should begin to even out as we get closer to summer. It should be reminiscent of the year we saw in 2019, where a healthy market wasn’t as frantic because there was much more stock for prospective buyers to choose from. There is also no tax duty holiday this year, which means we won’t see such incredibly eager buyers all coming to the market at once.
We envisage higher stock levels than last year because of the efforts made to return to ‘normal’, pre-pandemic living where buyers are looking for inner-city houses and properties in line with working from home slowly becoming less prevalent. This should also mean that the number of people looking to move into the countryside will drop, allowing those who are still intent on leaving the city to have more time to view multiple properties before placing their bids.
We also predict smaller rises in the Bank of England interest rate in 2022 in a bid to lower the effects of inflation, but the effects of this on the housing market remain to be seen.
Another change to the property market in 2022 is likely to be that the rental market will grow again. During lockdowns, millions of tenants moved back home – taking advantage of the government’s initiative of lowered rent payments to compensate for furlough – but the same people are either already back in rented property or on the lookout for their next home, regardless of rising prices.
The possibility of landlords selling their investment properties is still rife, however, with over 20% looking to sell and only 7% fully committed to expanding their existing portfolios. This is made more surprising by the fact that office space in large cities like Edinburgh may be converted into residential property. With so many aesthetic buildings in city centres nowadays, this would present a big opportunity for landlords and investors. The rental scene is therefore one area of the 2022 Scotland property market which needs to be viewed with a hint of caution.
After COP-26, there is also a major push for more energy-efficient homes – including a better standard of new-build homes as well as improvements being made to older houses and property before they are put on the market. The UK Government has already announced a new legal requirement for all new-build properties in England to install electric car charging points and, whilst the Scottish Government has not followed suit yet, a similar scheme taking effect should not be ruled out.
All in all, we should see demand for property eased by increased stock levels, with the rental market slowly making its way back to pre-pandemic levels.
Interested in buying, selling, letting or renting in Glasgow or Edinburgh? Call our Glasgow team on 0141 221 7993, or our Edinburgh team on 0131 221 9131 today!