Homes shock

House prices ‘could fall by 35%’ in Scotland

For sale, sold, homes, housing, property
House prices could fall sharply next, an estate agent has warned (pic: Terry Murden)

House prices in Scotland could fall by a third and take a decade to recover, according to an estate agent.

The latest figures from Nationwide Building Society show prices across the UK tumbled 1.4% in November compared with October, the biggest monthly drop since June 2020.

The fall was much larger than market expectations for a fall of 0.3% and left annual house price growth at 4.4% in November down from 7.2% in October, Nationwide said.

Marie Johnstone, managing director at Edinburgh-based estate agency, Wilson Property Group, said: “For now, the property market in Scotland is holding up – just.

“Higher end luxury homes in Scotland remain sought after and are still selling well despite the challenging economic conditions. However, as the recession takes hold in the coming 6-12 months and unemployment almost certainly rises, we will see a seismic shift in the property market and prices will start to fall.

“With rates set to rise further as the Bank of England attempts to rein in inflation, we could be in line for a 25%-35% decrease in average property values that it could take a decade to recover from.

“By January, it will very much be a buyer’s market in Scotland, much like the rest of the UK.

“In Scotland, landlords are selling up portfolios, often at a significantly reduced rate. The cap on rental income has driven further uncertainty into an unstable marketplace.

“We could see an avalanche of flats coming onto the market in the New Year once the short-term lets have cashed in on the Christmas trade.

“The change in the rules from April 2023 is driving this. Where we are likely to see demand is from international buyers given the weakness of Sterling.”

Robert Gardner, Nationwide’s chief economist, said: “While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum.

“The market looks set to remain subdued in the coming quarters. Inflation is set to remain high for some time and Bank Rate is likely to rise further as the Bank of England seeks to ensure demand in the economy slows to relieve domestic price pressures.

“The outlook is uncertain, and much will depend on how the broader economy performs, but a relatively soft landing is still possible.”

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