Tayside expert predicts Scotland will see less house price volatility than England

By Rob McLaren

November 16 2022, 5:25pm

Thorntons Property managing director Peter Ryder

A Tayside property expert believes Scotland is more insulated from house price volatility than south of the border.

The Royal Institution of Chartered Surveyors has warned of a weakening of the property market as buyer caution increases.

Mortgage rates have soared in the last two months and the Bank of England increased its base rate from 2.25% to 3% a fortnight ago.

Meanwhile, it is harder for first time buyers to save a deposit during the cost of living crisis.

All signs point to a fall in UK property prices, with Lloyds Bank predicting a 7.9% fall – with a worst case scenario of 18%.

Less house price volatility for Scotland?

However, estate agent Peter Ryder, managing director of the Thorntons Property Services, believes Scotland’s housing market could prove more resilient than in England.

He said: “The property market in Scotland is less volatile regarding house price stalls and falls when compared to the south.

“Around 50% of all buyers are either cash buyers or take out mortgages of less than 50%. Even with the increase in rates they will still be able to afford to buy property.

“Just over a fifth, of buyers get mortgages between 50% and 75% loan to value while about a quarter of buyers get mortgages between 75% to 90% loan to value.”

Borrowing costs stabilising

Borrowing costs have fallen since Chancellor Jeremy Hunt reversed almost all the tax giveaways of his predecessor Kwasi Kwarteng. A month ago rates were around 6%.

Mr Hunt has made keeping borrowing costs low one of his key priorities as he prepares to give his first budget on Thursday.

Mr Ryder adds: “Rates are expected to settle around 4.5% to 5%. This is less than was expected a few weeks ago.

A for sale sign outside a home with a line graph showing house prices in Scotland — Potential buyers who have been outbid might be able to buy properties closer to home report values.

“All lending institutions are in a much stronger financial position compared to a decade ago and have money to lend.”

He is seeing fewer offers above asking price but said that people still want to move.

“This means some potential buyers who left the market due to being outbid will re-enter and try to secure a property around the home report value,” he predicts.

“The market is currently in a period of readjusting, but we still have plenty of motivated buyers out there who will return to the market once the government have demonstrated they have the economy back under control.”