Property Market Outlook 2022

The re-opening of the Scottish housing market in June 2020 saw the beginning of a period of intense demand which continued into and throughout 2021. As 2022 begins and with a return to pre-pandemic life now in sight, first-time buyers, homeowners, and investors alike wonder what the future will bring for Scotland’s property market.

, published this week, show tremendous growth in market activity. These figures are reflected in the experiences of stakeholders across the industry with conveyancing practitioners, estate agents, and mortgage advisors all reporting increased levels of business over the past 18 months.

Though it has been a uniquely turbulent time, there have been some key developments in this period that can shed some light on the outlook for 2022.

In the summer of 2020, first-time buyers faced the daunting dilemma of taking their first step on the ladder (assisted in many cases with Scottish Government incentives) amidst a fiercely competitive market or biding their time in the belief that the volatility might be short-lived. It is fair to say as we reflect on those early months that anyone thinking of waiting would have been doing so for a while.

Government incentives such as the LBTT holiday from July 2020 to March 2021, which brought tax savings of up to £2,100, helped drive up the number of residential property transactions throughout the second half of 2020 and into the first quarter of 2021. This resulted in a particularly memorable race to ensure that those due to complete before the deadline on 31 March 2021 were able to do so.

The Scottish Government’s First Home Fund, first launched in 2019, aided first-time buyers across the country with up to £25,000 per property available and saw such rapid uptake that it closed to new applicants for the 2021-2022 financial year after less than a week in April 2021.

Though the LBTT holiday ended and the First Home Fund’s funding was fully allocated nearly a year ago, it is important to consider that the landscape now is entirely different to that of summer 2020: the LBTT holiday was brought in when many first-time buyer-friendly mortgages (those with a loan-to-value ratio of more than 85%) had been withdrawn from the market by cautious lenders in the wake of the first lockdown. This was not too long after the Bank of England had predicted a double-digit percentage drop in house prices due to the pandemic. Thankfully, the Bank’s worst fears did not materialise and the average house price rose instead with the Registers of Scotland’s recent publication reporting an average price increase in all 32 Scottish local authorities last year.

As flexible working models look set to stay for many businesses, we may see an enduring appetite for properties further away from city centres. Indeed, the shift in how and where we work may result in former city-centre offices being adapted for residential use. At the moment, 95% mortgages are now back on the table and many buyers on all rungs of the ladder are sitting on savings accrued during lockdowns at a faster rate than they had previously planned. Whilst there is always uncertainty, these factors should continue to bolster strong cross-market demand throughout the year. Although the Bank of England this week increased the base rate again to 0.5%, competitive mortgage products should remain attractive to those looking to buy their first home, move up the ladder, or simply switch to a better deal.

It is difficult to predict what will happen in the future but the indication is that the demand for all kinds of properties across the country will remain high and lenders will continue to bring to market the products buyers and owners need to help them take the next step. Whatever your situation and whatever your plans, the conveyancing team at Jones Whyte would be delighted to help you get there: please get in touch on 0141 736 0011 or via the online .