Brexit hangs over sector
Calls for more house building as prices flatten
A report from property agency JLL predicts Scotland’s house prices will remain flat next year with growth of 1% in 2018.
House price growth in Scotland is predicted to rise to 4.5% a year by 2021 as greater certainty returns to the UK.
UK transaction levels are forecast to decline from around 1.22m this year to 1.08m next year, an 11% fall, as uncertainty causes some households to defer house purchase decisions. However, JLL predicts that the softer market conditions will encourage more first-time buyers to get onto the housing ladder, especially as interest rates will be so enticing.
Jason Hogg, Director Residential at JLL in Edinburgh, said: “Somewhat against the grain, house builders in Scotland have enjoyed a reasonable, immediate post-Brexit sales environment benefitting from the Scottish Government’s Help to Buy Scheme and record low interest rates.
“Enquiries for new development opportunities to meet housing demand in the short / medium term remains strong. However, we acknowledge that economic uncertainty associated with whatever Brexit we end up with is harder to model on larger sites.
“What has been particularly encouraging is to see how certain housing markets within Scotland, particularly Edinburgh City Centre, have seen strong price growth and increased levels of demand on new build housing stock.”
JLL is concerned about the impact that Brexit will have on housing supply, both in Scotland and across the UK. Its report welcomes fresh and new rhetoric from policymakers, but believes that it will be very difficult to even maintain current levels of house building given underlying conditions.
Mr Hogg adds: “Put simply, there are not enough homes being built in Scotland to satisfy demand. We know that the Scottish Government is actively seeking answers and it will be interesting to see whether policy initiatives target short-term supply improvements or look beyond the immediate horizon to create lasting, long-term solutions.
“Given the likely Brexit uncertainty over the next few years we believe that policymakers will be wisest to look long-term.”
> Homes for Scotland chief executive Nicola Barclay told its annual conference today that it is proving “much harder than it should be” to build the homes Scotland needs.
The latest statistics revealed a two per cent decrease in the number of new homes completed in Scotland, she said.
“The factors affecting construction are many and complex, but with key challenges including planning, infrastructure, utilities and skill shortages, it is much harder than it should be to build the homes Scotland desperately needs.
“It’s about time we started thinking of it in terms of being as easy as ABC with ‘A’ referring to ambition, ‘B’ the removal of barriers and ‘C’ for collaboration because all of us – builders, politicians and citizens alike – have an important part to play in ensuring Scotland’s future social wellbeing and economic success as well as achieving a fairer society.
“We must have a joined-up approach across all levels and departments of government if Scotland is to have enough of the homes and necessary facilities required to properly support its growing population.”
She announced the launch of a £250,000 Homes for Scotland Professional Skills Fund in partnership with the Construction Industry Training Board (CITB).
The fund, which will run until December 2017, will support the organisation’s CITB levy-paying members and is aimed at non-construction related staff.
Michael Lennox, strategic partnerships M=manager at CITB Scotland, said: “Scottish house builders told us that more needs to be done to address the range of skills challenges in the sector.
“This investment is a step towards addressing that important issue and ensuring we have the broad set of skills necessary to build the homes that Scotland needs.”
Housing Minister Kevin Stewart said: “It is our ambition to increase housing output across Scotland. That’s why we’re investing more than £3 billion of funding to deliver our target of 50,000 affordable homes over the next five years.
“Our More Homes Scotland approach supports delivery of homes across all tenures, including through Help to Buy (Scotland) and our Open Market Shared Equity scheme.
“I am determined to remove barriers to delivery. More and better partnership working and collaboration with our partners in industry will be key to delivering both that and our shared ambition of a thriving housing sector for Scotland.”