The Scottish property market is likely to remain stable in 2010, but further growth is unlikely to occur until the second half of the year, according to Edinburgh’s leading property solicitor.
Warners, which is the number one ranked solicitor estate agent in the ESPC, says that house prices are likely to remain stable during the first six months of the year but will start to steadily increase by the end of 2010, as confidence returns to the market.
Scott Brown, estate agency partner with Warners, said: “It’s been a challenging year for Scottish property, but we’ve now reached a point where stability has returned to the market. House prices have been rising slowly in recent months and confidence has been improving, so it’s clear that the market is on the road to recovery.
“However, 2010 will bring new challenges. At the start of the year we will see VAT going back up and Stamp Duty re-introduced on properties priced between £125,000 and £175,000 – the category that the average Scottish property price currently falls under – and this is likely to have some effect on the market.
“Some people may also decide to wait until they see a noticeable further improvement in the market before they start looking to move home.
“But I do not believe that this will cause the Scottish property market to experience any kind of downturn. There will still be many people who will be buying and selling properties during 2010, so I think it is far more likely that we will a flat market at the start of the year – where prices and sales volume remain stable before rising in the latter part of the year.
Scottish PR for property solicitor
“By the end of summer months, I believe that more confidence will return to the market which, in turn, should lead to further house price rises and an increase in the number of sales recorded across Scotland.”
Scott adds that a key influence on the property market in 2010 will be interest rates, and he highlights that the market could be hampered if the Bank of England decides to raise the base level dramatically in response to inflation or a perceived threat of inflation.
“So far the Bank of England has so far been very prudent in keeping the base rate low, which has helped provide stability in the market. By keeping it at its lowest-ever level of 0.5%, the bank has brought some much-needed relief to homeowners and lenders across the whole of the UK.
“However, there is a chance that further market growth will be hampered if the Bank of England decides to raise rates in response to inflationary pressures during the New Year. Any dramatic rise in interest rates would be a big blow to consumer confidence, as prospective home buyers may be put off from purchasing new homes – and existing homeowners could find themselves financially stretched when their mortgage payments increase.
“I would hope that any move to increase interest rates is resisted until there has been a sustained period of recovery in both the economy in general and the property market in particular.
“If this common sense prevails, I think there is genuine reason to be optimistic about the property market in the second half of 2010.”