According to the latest RICS UK Residential Market Survey, house price gains in June remained positive across Scotland, and demand for property continued to grow across the country.
The survey showed that demand continued to outstrip supply, with a net balance of 32% of chartered surveyors reporting a growth in new buyer enquiries. This is while just 1% reported an increase in new instructions during June. Continued demand for properties was also reflected in the newly agreed sales balance, which is a good indicator of market activity. This has shown steady growth since February 2013.
When the Bank of England introduced a 15% cap on high (4.5 times and above) mortgages, respondents also perceived banks to be lending less. Average Loan to Value (LTV) ratios among first time buyers dropped for the second consecutive month in Scotland to 85.4%. Sarah Spires, Director of RICS Scotland said;
The Bank of England’s recent introduction of a ceiling on high loan to income lending and a 3% interest rate stress test is unlikely on its own to have an immediate influence on the market.
However, rhetoric from officials at the Bank of England along with the consequences of the introduction of the MMR is already slowing momentum particularly in London. In Scotland we continue to see demand exceeding supply and this has a direct impact on prices. While we do expect this to level out as summer months continue, the lack of supply is a key factor driving the Scottish market and one which will be addressed within the Scottish Housing Commission’s recommendations published later this month.
The survey showed that Scottish house prices, have however, remained stable. A net balance of 57% of respondents reported an increase in prices in June (from 34% in May). Looking to the future, the number of respondents expecting prices to rise, rather than fall over the next three months remained steady at 40% (from 44% in May).
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