Are property prices starting to fall in Tayside and Fife?

Will the cost of living crisis and tougher lending conditions lead to a fall in property prices in Tayside and Fife?

Soaring inflation is making it harder for first time buyers to save while frequent Bank of England base rate increases is making it more expensive to borrow.

After two years of rapidly increasing prices, are economic issues starting to impact on the local property market?

We asked six property experts from across Tayside and Fife to share their thoughts on the current property market as we head into summer.

Property prices in Tayside and Fife plateau

Gilson Gray partner Lindsay Darroch says the cost of living crisis, high energy costs, fuel costs, inflation and the war in Ukraine all contribute to cooling the market.

Higher costs lead to fewer buyers which in turn leads to a slight increase in housing stock on the market.

Mr Darroch, who runs the firm’s Dundee office, says: “It will be interesting to see if the property market starts to restock or if sellers are put off by economic conditions.

“Also to see what impact the rising interest rates have on the property market – Canada is now seeing significant falls in property prices driven by similar conditions as we face.

“I expect we will see an increase in the number of properties staying on the market and a plateauing of prices.

“The gap between home report value and achieved price may narrowing significantly – expect more fixed price properties and price reductions.

“Third quarter figures will be telling and will determine the rest of this year and the first half of next.”

Warm weather cools market

Director of Perthshire estate agent Possible Gary Robertson thinks the holidays will only temporarily cool down the market.

He said: “It’s the first time in over two years that some people can enjoy a proper summer holiday and many people are taking full advantage of that.

“This means there’s perhaps less properties coming to the market than previous months and less viewers for some properties.”

Meanwhile RSB Lindsays partner Chris Todd says activity is on the up again after signs of the market cooling last month.

He has seen a spike in the number of people placing their homes for sale in the past three weeks.

“It’s an interesting market. The peak of the seller’s market has passed, but activity and demand for all homes remains strong,” he says.

“Things have stepped up again – not to post-lockdown levels, but buoyant and busy nonetheless.”

Signs of Tayside and Fife property prices ‘softening’

However, there are signs of prices softening according to Blackadders’ director of property services Martin Paterson.

The shortage of housing stock creates a quick turnaround, but many buyers are now put off by this and look at new builds as an alternative.

“New builds are also typically a fixed price which is appealing to the buyer,” Mr Paterson explains.

“Towards to end of the year I suspect, although prices will not fall, the market may well level out.”

Change in mortgage lending criteria

Thorntons Property Services managing director Peter Ryder strikes a more upbeat note.

He thinks prices will remain high for now due to demand outstripping supply.

High interest from first time buyers remains and this helps sustain the property market as banks are still lending.

But the attitude of banks will impact on prices, he says.

“Banks are beginning to take into consideration the cost of living, especially the increase in gas, electricity and fuel so there are signs that they are tightening up on their affordability models.

“This will have an impact in the months ahead and could lead to a cool down within the market.

“However this will be limited due to the number of buyers.”

He thinks the market will remain busy until the start of 2024, then it will return to more normal levels of activity and prices.

Far from a buyer’s market

In Fife, the property market is on the cusp of a tipping point.

This will influence house prices, the number of properties for sale and buyer demand says Jim Parker.

The Fife Properties agent stresses this shift is not a collapse, but a levelling out, as interest rates are rising and mortgages will be more expensive.

Mr Parker says: “Houses for sale has grown 17% in the last 6 months, so buyers have more choice.

“However, we’re only at 630, nowhere near the pre-pandemic level of 1,200 homes for sale.

“House price reductions have gone up 30% from the first quarter to the second quarter, meaning Fife house sellers are being more realistic with their pricing to get their properties sold.

“There are signs that the Fife property market has started shifting more into buyers’ territory.

“Yet is a long way from the traditional idea of a buyer’s market.”