An Overview of Scotland's Residential Property Market: Autumn Edition

As the summer of 2024 draws to a close, we take a closer look at how the market has performed over the last few months and what we can anticipate as we move into autumn.

Summer Market Highlights

Over the course of the summer, estate agents typically witness a lull in activity for residential property sales. This year, however, was an exception, where we observed a much higher than average number of properties joining the market and steady demand from buyers. In ESPC’s July House Price Report, across Edinburgh, the Lothians, Fife and the Borders there was a 9.2% rise in properties coming to the market and sales volumes were also noted to be up 22.2% year-on-year.

The demand for family homes in sought-after neighbourhoods has continued to drive price growth, with many properties still attracting competitive bids and selling quickly. However, affordability remains a concern, with the ongoing cost-of-living crisis, coupled with higher mortgage rates, dampening buyer enthusiasm in some areas of the market and leading to an increase in selling times generally.

The trend of landlords exiting the market or reducing their portfolios has continued throughout the summer. The rise in mortgage rates, increasing regulation and taxation are all said to be behind the exodus, whilst mortgage affordability and high ADS (Additional Dwelling Supplement) are also hampering interest from new landlords.

A continuing issue within the market has been an increase in the number of lengthy and complex chains. Many buyers are choosing to make offers subject to the sale of their own properties as there is an understandable nervousness, particularly for families, around marketing your home with no purchase secured to move into. Where once rental properties could be a great stop gap between sale and purchase, the distinct lack of suitable rental properties makes this unviable for the majority of movers. Furthermore, those with low mortgage rates on their existing homes are keen to port their mortgage which makes timing a move carefully a priority.

The Scottish property market is likely to face both opportunities and challenges over the autumn period. The market traditionally experiences a temporary uptick in activity over September and October and with interest rates seeing their first fall from their peak of 5.25% (they are currently sitting at 5.0%), there may be renewed confidence among buyers who had been waiting for more certainty in the market.

Another factor to watch is the impact of potential changes in government policy. Forecasted changes to capital gains tax have made landlords and second homeowners jittery and we have already seen an increase of properties being brought to market from sellers trying to protect their investment and beat the introduction of these predicted measures.

We are also expecting that the changes to VAT on private school fees, coming into force at the start of the new year, will prompt many families to reconsider their educational choices, leading to increased interest in homes within catchment areas for top-rated state schools. Edinburgh, where a significant proportion of children attend private schools, is likely to feel this impact keenly. However, the full effect of this VAT change on the local property market remains difficult to assess, as families weigh up the many factors involved.

In rural areas and smaller towns, the market is expected to remain stable, albeit with a more measured pace of transactions. The appeal of rural living continues, particularly as we head into autumn with its promise of scenic beauty and a slower pace of life. Despite this, sellers in these areas may need to be more patient and realistic with pricing, given the economic backdrop and an increase in employers requiring staff to be in the office more regularly.

As we transition from summer to autumn, Edinburgh and East Lothian’s residential property market remains a mixed but largely resilient landscape. For those considering entering the market this autumn, whether buying or selling, staying informed and adaptable will be key to navigating the evolving conditions.

Looking to move this Autumn?

Coulters is here to help guide you through every step of the process. Whether you’re looking to buy, sell, or simply need advice on the current market, we’re ready to assist.