What will happen in the Scottish housing market in 2024?

What does the future hold for the Scottish property market? ESPC’s CEO, Paul Hilton, shares his thoughts on what we might see over the next 12 months.

2023 was a remarkable year for the property market, in that we saw a very different picture to the one we’ve come to expect in recent years. The cost-of-living crisis, coupled with numerous interest rate rises affecting the mortgage market, impacted the property market in a variety of ways, as we’ve discussed in detail in our monthly House Price Reports.

While we don’t have a crystal ball and we can’t be certain of what will happen in the months to come, we can take an educated look at what we expect to happen.

In 2024, I would expect to see the market continue in a similar way to what we saw during the second half of 2023, with volumes down on the last few years.

The supply of available properties will increase, as homeowners may decide to downsize or move to an area where property prices, and therefore mortgage rates, are more affordable, but I don’t expect to see a huge amount of repossessions or ‘forced’ sales. Some of the more discretionary sellers may defer their decision to sell, and simply sit tight for a few years until mortgage rates are potentially lower.

Speaking of mortgages, interest rates will likely not begin to fall until May 2024 at the earliest. However, we are also unlikely to see any further rate rises, and competition amongst lenders could mean that we may see slightly lower rates coming through anyway, during the first half of 2024.

Tenants who are faced with a shortage of available properties to rent, alongside rising rental rates, may change tack and decide to step into the property market as first-time buyers, lessening the pressure on the rental market.

Overall, I expect the market to feel more stable, with buyers more aware of the cost of mortgages and therefore being more cautious about affordability. This means that some sellers will have to accept offers around or even below the Home Report valuation in order to sell.

I expect sales to be steady, though we will see a continuation in the increase in the number of homes listed for fixed prices, and the offers-over premium will be smaller than in previous years, with buyers bidding more carefully.

The Scottish Government’s strategy on energy efficiency and EPC ratings may have a small bearing on the market, as some sellers will be weighing up the cost of retrofitting to improve their property’s rating, versus buying a more modern home. As long as the government’s proposals are reasonable and proportionate to the age of housing stock, I do not think this will have a huge impact on the market.

I firmly believe that throughout everything going on in the wider property market, Edinburgh will continue to be seen as a highly desirable place to live, and will continue to attract interest from overseas too, which will all help to keep the local market relatively stable.