The market for residential properties in Scotland is still growing and will be an interesting investment opportunity. Statistics show that in the third quarter of 2018 (July-September), the average price of a property sold was around £182,000. Although the overall property market in Scotland is currently experiencing a slightly weaker period than in previous years, some areas such as Glasgow still provide many options to invest. It is also important to note that the housing market in Scotland differs from the rest of the UK.
A reason might be the uncertainty for home buyers and sellers which is caused by the potential implications of Brexit. This has mostly to do with the impact Brexit has on related sectors such as banking and finance, but also immigration and relocation. It also remains to be seen how strongly it will affect the UK’s economy in general. In a ‘no-deal’ scenario, it is feared that property prices could fall. However, experts still describe the property market in Scotland as healthy and less volatile than for example the market in London. It is therefore seen as an attractive environment for investments. Some even see Brexit as an opportunity for a boom in the Scottish economy which would also positively affect the property sector.
Another factor which has been limiting the property market is the hesitancy of both buyers looking to find a home and those thinking about selling their property – both being inevitably connected: there is still a limited stock of property, which creates strong competition amongst buyers. Once a property is for sale, the former owners have to find a new property to live in within this intense market once the sale has gone through. This has prompted the development of making offers ‘subject to sale’, creating a dependency among the parties within a line of sales and purchases on the ability to sell their own flats or houses and makes the market more volatile. This scenario however means that there is a high potential within the market for investors seeking to build new property to meet this significant demand and great profits could be made in relatively short times.
Both the City of Edinburgh and Glasgow have had a decreasing volume of sales in 2018’s third quarter. However, this negative trend has been much stronger in Edinburgh than in Glasgow. The West of Scotland in general has proved to be a popular area for investments, and it was also revealed that the total sales volume of homes in Glasgow has overtaken the market in Edinburgh. Glasgow might therefore be an interesting option to be considered by current investors, despite the common popularity of Edinburgh as a place to work and live in the UK. Glasgow’s property prices have grown faster than those in any other major city in the UK while in comparison remaining on an affordable level.
Even for people who work in Edinburgh, a commute from Glasgow might be well worth considering: research has shown that moving to an area around one hour away from the capital (such as Glasgow, Motherwell, Dunfermline, Kirkcaldy), can save home buyers around £82,000 on their house price. This makes Glasgow’s suburbs an attractive option for commuters and as a result closing dates are competitive and property values rise. Edinburgh is currently the most expensive Scottish location for properties with an average price of over £267,000.
But it is not only Glasgow’s suburbs that are increasingly popular: a new trend of reinstalling the residential functions of the city centre has helped new high-profile projects to be realised. While the city centre has traditionally been more reserved for businesses and shopping, new investments have been made in Merchant City and the surrounding city centre areas (G1 and G2) through ‘Build to Rent’ schemes and are supported by the Glasgow City Council. Additionally, the south of the city (for example Ibrox and Govanhill) has undergone regeneration works driving up the value of properties while offering great accessibility to the city centre. This trend might even be enhanced in the future through projects such as the new opening road bridge across the River Clyde which will connect Renfrew and Yoker. It has recently received ministerial approval and is expected to create many new jobs as well as boost the local economy. It also involves a connection to a new manufacturing site close to Glasgow airport which requires building new roads, cycle paths and walkways. This means there will be benefits on either side of the Clyde through improved connectivity to workplaces, hospitals and schools.
Another recent announcement by the City of Glasgow Council is the Water Row masterplan, which aims to further improve connectivity within the city. The proposed plan includes the construction of around 200 new homes and significant new commercial spaces for businesses. However, the plan’s highlight is the construction of a 110m bridge connecting Govan, to the South of the River Clyde, with Partick to the North. The project is due to be completed in 2021 and will greatly improve the accessibility to facilities for communities on both sides of the river. This shows that these areas are high on the Glasgow City Council’s radar for regeneration and it would be expected that, as the city and its surroundings become ever more connected, areas like Govan will become increasingly popular and pull the housing market along with it.
Through significant investment in the city through projects like these, Glasgow’s property market is becoming more and more attractive, even outside its prime areas such as the West End and Bearsden. Despite the fact that the number of sales across Scotland have decreased this year, with the high demand for property and comparatively low prices it is unsurprising that investors are now finding their opportunities West of the capital.
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