Coronavirus COVID-19 and the impact on the Scottish property market: what we know so far
When lockdown restrictions were implemented in Scotland in March as a result of the Coronavirus pandemic, property market activity was severely impacted. Restrictions meant house moves and related activities could not go ahead unless deemed “reasonably necessary”.
This very quickly resulted in property sales volume and the number of homes coming to market dropping to very low levels during the traditionally busy spring period.
However, since restrictions on the Scottish property market were relaxed at the end of June, we have seen a surge in property market activity, with lots more houses and flats coming to market and generally high competition from buyers for these homes.
Paul Hilton, CEO of ESPC, said: “In recent months, we have seen unprecedented demand to buy and sell in Scotland. This is due to pent up demand as result of lockdown and people re-evaluating their priorities when it comes to their home.”
In this article, we look at recent data to assess the impact of the COVID-19 pandemic on the Scottish property market so far. You can also find out the latest guidance on Coronavirus and moving home in Scotland. You can also find out advice for property buyers and sellers during the Coronavirus pandemic.
There has been lots of speculation about what the Coronavirus pandemic means for house prices in Scotland. ESPC’s October House Price Report, covering the period from August to October 2020, revealed the average property selling price in Edinburgh, the Lothians, Fife and the Borders to be up 7.9% compared to last year.
The Scottish Borders saw a particularly notable increase in average selling price, rising by 20.6% year-on-year. The average percentage of Home Report valuation achieved in this area also jumped up to 100.1% compared to 96% last year. This could be a result of lockdown restrictions and subsequent changes in lifestyle, including more homeworking, leading more people to consider moving to the Borders.
However, the average selling price in Edinburgh also rose by 6.2% year-on-year and our agents are still reporting relatively strong demand for homes in the city.
Across the whole of Scotland, the average property selling price has also risen year-on-year. In the latest quarterly statistics from Registers of Scotland covering the period from July to September 2020, they reported a 1.3% increase in average selling price compared to last year.
Since property market restrictions were eased at the end of June, there has been a surge in the number of homes coming to market. From August to October 2020, ESPC noted a 44.4% year-on-year increase in new listings in Edinburgh, the Lothians, Fife and the Borders.
This is likely due to lockdown restrictions preventing people from selling during the spring, resulting in the busy activity we would normally see during this period being pushed back to the summer and autumn months.
However, our agents have also reported that many people realised during lockdown that their property was no longer fit for purpose. Whether they wanted a garden or simply more living space, this also led to an increased number of homes coming to market.
This increase is positive news for buyers – for many years, particularly in Edinburgh, there has been a lack of supply of new homes coming to market. A greater number of homes on the market means more choice for buyers.
Keep up to date with new homes coming to market with My ESPC.
During the lockdown restrictions in the spring, house moves were advised against unless “reasonably necessary”. This resulted in the volume of property sales falling to much lower levels than usual for that time of year.
As restrictions were eased at the end of June, sales volume started to increase but it is only in the last couple of months that we’ve seen sales volumes catch up to and exceed last year.
In our October House Price Report, the property sales volume for Edinburgh, the Lothians, Fife and the Borders was down 5.6%. This decrease was concentrated in August while September and October saw significant increases in sales volume.
This is due to the time it takes for a property to progress from “under offer” to “sold” – a mortgage application may been to be submitted and the legal side of the transaction needs to be arranged by the solicitors.
Due to the surge in activity and the fact that solicitors, mortgage advisers and lenders are working from home, the mortgage and conveyancing processes are also taking slightly longer than usual.
From August to October 2020, the median time for a property to be placed under offer in Edinburgh, the Lothians, Fife and the Borders was 18 days, which is three days faster than last year.
However, as mentioned above, the time it takes for a property to progress from “under offer” to “sold” is slightly longer at present. This is because there has been a surge in activity since June, resulting in a significant workload for lenders and solicitors, who are also generally currently working from home.
Paul Hilton, CEO of ESPC, said: “There has been an unprecedented amount of activity from both buyers and sellers in the Scottish property market since the end of June. This has largely been due to pent up demand and people re-evaluating what they wanted from their home going forward. The increase in activity was potentially also encouraged by the increase of the zero-tax LBTT threshold to £250,000 and the additional investment into the First Home Fund in July.
“We are starting to see this activity cool in comparison to the exceptional levels of the summer months, but this to be expected as we approach a typically quieter period for the property market.
“In the current climate, it’s very difficult to predict exactly what will happen with the Scottish property market going forward. Currently, house moves and related activities are permitted under all tier levels in Scotland (although those in tier four may wish to consider postponing them). Further restrictions could also be placed on the market in the coming weeks and months which could impact activity.
“However, the high levels of demand we have seen in recent months will hopefully ensure the market remains relatively steady into the new year.
“Those planning to buy or sell a property in the near future should seek expert advice from a solicitor in the first instance to find out about the latest guidance and local property market conditions.”
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