The turn of the year could see significant changes to Scotland’s property market, bringing with it some long-awaited good news for first-time buyers.
Following the announcement in the Scottish budget that first-time buyers will soon forgo Land and Building Transaction Tax on homes up to £175,000, getting on the property ladder could become a more attainable prospect - as price growth is also predicted to slow in 2018.
Annual house price inflation, measured by ESPC at just over 9.8% in the capital over the last 18 months, should ease to just 2.5% over the course of next year, according to industry experts at Warners, a leading solicitor estate agent.
That should further reduce pressure for first-time buyers who have been struggling to compete in a market with a significantly higher number of buyers compared to homes on the market.
David Marshall, Operations Director at Warners Solicitors and Estate Agents, said: “It’s no secret that the Edinburgh property market has been very strong in the last 18 months, and this will tempt more sellers to get their home on the market in 2018.
“We have already seen evidence of this increase in homes coming to market towards the end of 2017. Whereas earlier in the year the number of new listings was down by almost 10% annually, more recently the volume of properties coming onto the market has risen. This improvement in supply will inevitably lead to a more balanced market in 2018."
A further factor that could contribute to the drop in house price inflation is the ongoing Brexit negotiations.
David added: “While the hard and fast economic impacts of leaving the EU – be they positive or negative – will only be realised over a number of years, the uncertainty caused by negotiations are likely to impact the market in the shorter term.
“During times of uncertainty people will typically delay major decisions, such as purchasing a property, so there will be times during 2018 when demand is dampened.”
A more favourable situation for buyers doesn’t mean that it’s all doom and gloom for sellers. In spite of an increase in October, the unemployment rate in Scotland is still lower than in the rest of the UK, and modest economic growth is anticipated during 2018.
Additionally, interest rates remain at historically low levels and are expected to rise only gradually over the next 12 months, meaning that the cost of borrowing for prospective buyers will continue to be low.
David said: “On the surface, the market cooling and the better balance between demand and supply in 2018 can seem like bad news for sellers who have been enjoying a booming market.
“But most of us buy and sell at the same time so, if the price of our current home increases, the price of the home that we are looking to move to is also likely to have also increased.
“Having house price inflation come down to more modest, sustainable levels will not just benefit first-time buyers, but it should too, ultimately be to the long-term benefit of the market.”