Our latest research has looked at how the uncertain future of the Scottish nation is resulting in a potentially turbulent time for Scottish homeowners.
Given the SNP’s insistence on yet another referendum on its independence and the Prime Minister’s equally robust approach to not conceding one, we examined Land Registry data from the SNP’s election win, the passing of the Scottish Referendum Act 2013, the Scottish Referendum itself, the second passing of the Scottish Referendum Act and the present day, to see what impact the uncertainty of Scotland’s future has had on the property market.
When the SNP came to power in May 2011, the average house price across Scotland actually fell by -0.01% immediately that month. Their promise of an independent Scotland then saw the market yo-yo and over the following two years, the average Scottish house price fell by -0.14% with 16 of the 24 months in this period seeing a monthly drop in prices.
When the Scottish Referendum Act was passed in June of 2016 the rate of growth slowed before again falling in September and October.
In April 2014 Scottish homeowners enjoyed a healthy monthly increase in values of 2.33%, but with the referendum on the horizon this rate of growth slowed over the next four months, before prices fell -0.57% during the month of the vote itself.
Since the vote Scottish homeowners have seen an overall, if only marginal, lift in property values. However, the further uncertainty of a second referendum is once again seeing price growth behave erratically month to month.
Nicola Sturgeon’s announcement of a draft of a second referendum came in a month where price growth hit 2.21% on average. Following her announcement this monthly growth slowed to 0.71% before falling gradually up until the second bill was announced in October 2016 when prices fell by -0.89% in a month.
It is clear that should there be a vote for independence, the knock-on effect to the property market will be notable. Since the people of Scotland already voted no, house prices across the nation have seen an increase of 5%, but the mere action of a referendum vote has been enough to cause considerable turmoil. A vote to leave would make for very precarious times ahead and it is in these times of unrest that employment and the wider economy suffer, with the result often being the repossession of homes and downward pressure on house prices.
As we’ve seen with Brexit, the uncertainty of an outcome can cause just as much turbulence to the property market as the decision itself. It was a pretty close call last time around and so it’s understandable that homeowners on both side of the Scottish referendum coin would look to either hold off on, or push through a sale, depending on their own preference. This out of the ordinary manipulation of the market on both sides is no doubt the most influential factor behind this market movement.
It certainly doesn’t help that once a decision has been reached, the SNP continue to stoke the fires of change with plans for a second vote. It’s fair to say that the Brexit vote was more monumental and pivotal, but despite this the market south of the border has remained steady where price trends are concerned. Having weathered the storm the initiation of Article 50 should see normality return to the property market in England and Wales as it finally emerges from a tunnel that the Scottish market is, for the second time, just about to enter.Russell Quirk