Buyers and sellers of property in Scotland are facing uncertainty as the UK prepare to leave the EU, following last week’s referendum result.
Concern over the prospect of a Brexit led to the biggest fall in people looking to buy property since the financial crisis, according to reports – and that was before anyone had cast their vote. However, experts hope that any negative consequences for the Scottish property market will be short-lived. Here’s an overview of the current implications for property in Scotland.
Fall in Prices?
The Government warned that property prices could plummet in the event of a Brexit – and a slowdown in the growth of property prices is already being reported. According to the latest polls, large-scale property investors believe that the UK’s departure from the EU will result in less property investments in the UK, which could contribute to a significant fall in prices.
If lenders impose tighter controls, it may become more difficult to secure a mortgage. Additionally, the flow of workers into the construction industry may be disrupted, meaning less new homes are built in Scotland and the rest of the UK.
Danger of Scottish Property Market Freeze
In Scotland, buyers and sellers are understandably wary of how Brexit will affect them. Many are concerned that the UK leaving the EU may contribute to a property market freeze. Indeed, if buyers are deterred by the referendum result, demand and prices could both fall. Homeowners may also think twice about selling if the value of their property diminishes.
Property website Zoopla has claimed that £1.5 trillion could be wiped off the value of the UK’s housing stock as a result of the lack of confidence, reduced investment, increased borrowing costs and higher unemployment that the UK’s departure from the EU may cause.
Another Vote for Scottish Independence
While swathes of the UK voted Leave in the referendum, the Scottish people opted overwhelmingly to Remain. Calls for another referendum on Scottish independence are already being made, and many believe that the consequence would be Scotland’s separation from the rest of the UK, and a bid to re-join the EU.
Exactly how Scotland’s departure from the rest of the UK would affect the country’s property market is unclear, adding to buyers’ and sellers’ doubt. One possibility is that there would be a reduction in property transactions between Scotland and the rest of the UK, which could lead to a fall in prices north of the border.
Could Scottish Buyers Benefit from Brexit?
Despite the doom and gloom which has dominated so much post-referendum analysis, Brexit may have some advantages if you are considering buying a home or investing in property in Scotland.
If predictions are correct and there is a significant fall in property prices, the coming years may present the perfect opportunity to get a good deal. Property has historically been a reliable investment, weathering economic shocks far better than many other markets.
There is optimism in the Scottish property market. The referendum result has undoubtedly created uncertainty, and this may have some negative consequences for property prices, mortgages and investment opportunities. However, there is a widespread hope that these will be temporary, and that confidence in a market which is far more self-reliant than others in the UK will quickly return.