July saw the highest level of property sales in 6 years. However, with possible Scottish independence looming, the uncertain future of the property market is forcing people to question their next move on the property ladder.
There is no doubt that the £300 billion Scottish Property market has a major contribution in the overall UK market. According to estate agent Savills, 84,000 Scottish property changed hands last year amounting to over £13 billion of the total £254 billion worth of UK property transactions. LSL Property Services released their latest House Price Index report which recorded a total of 9,285 transactions in July, a 5% increase from June, a new high since 2008. Although the figures suggest a steady and stable Scottish property market, the monthly rate of growth slowed to 0.2% suggesting a state of uncertainty in the industry.
Although employment regions such as Edinburgh and Aberdeenshire have seen up to 25% increases in transactions since last year, the monthly rate of growth has declined. One reason the rate has decreased is due to the reduced supply. With the Scottish referendum looming, some Scottish based estate agents say that high end sellers and investors with the luxury of time, are waiting to see what way the tide turns before they put their property on the market. This could explain why although the rate of completed transactions has slowed, the average price increases thanks to demand outweighing supply.
Some of the uncertainty is a result of what will become of the pound if a ‘Yes’ vote were to be the majority. If Scotland were to remain a member of the EU then they could adopt the Euro. However, with strict legislation set by the EU, in the short term it is unlikely based on the fact the UK as a whole fail to meet the criteria. If Scotland were to introduce their own currency, it could deter investors depending on the currency strength, resulting in a property crisis within the newly formed sovereign state.
However, if the outcome of the referendum is a majority ‘No’, we could see a rapid reverse of the current lack of growth. There is a possibility of a mass take-off of sales and investments which could have short term effects on the UK property market. As far as a long term outlook on the market goes, Scott Green – CEO of NeedaProperty.com states that ‘A majority ‘No’ vote would allow the current UK market to continue to recover’. All of this suggests that without Scotland, the current UK market is facing huge obstacles in terms of a currently plateau recovery.
At this stage, a long term outcome is impossible to accurately predict. Despite the opinions from some of the countries leading professionals on the matter, no one can determine what exactly will happen, especially when taking into account the fluctuating property market statistics from recent months. All that we can speculate is that an independent Scotland will have an impact on the property industry. Only time will tell during this current uncertainty.