Spotlight: Scotland Residential

Scotland’s market will outperform the rest of the country, underpinned by a lack of supply, the value gap and economic growth in Edinburgh and Glasgow

Scotland’s residential market remains unfazed by the political uncertainty currently affecting the rest of the country. The number of transactions increased by 2% at the end of last year, supported by a record-breaking prime market. Meanwhile, the official UK House Price Index for Scotland has seen positive annual growth for the last 33 consecutive months.

However, what happens next is less clear cut. Our forecasts assume that if Article 50 is extended, it is for a relatively short period and that, ultimately, we avoid a no-deal Brexit. That would give households greater confidence over their future finances, which in turn should underpin buyer sentiment to support an improvement in house price growth in 2020. We cannot rule out a delay in this should negotiations to leave the EU become more drawn out. Meanwhile in the event of a no-deal Brexit, the impact on the housing market will be dependent on the Government’s response to support the economy.

Despite the uncertainty, Scotland still has room for growth, particularly in popular, well-connected neighbourhoods. In many of these markets, supply falls well short of demand, so competition will drive up values.

Figure 1

Source: Savills Research

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