House prices are expected to rise over the first three months of 2024.
An overall improvement in market conditions will see prices of properties in Scotland increase, according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey.
It is the first-time that the survey respondents’ three-month expectations for prices have moved into positive since May 2022.
This coincides with an overall improvement in sentiment within the Scottish residential market, according to experts, which appears to be linked to the trend towards lowered mortgage rates.
Indeed, along with Northern Ireland and the North West of England, Scotland is one of the only parts of the UK where respondents expect prices to move higher over the course of 2024.
A net balance of +8% of respondents in Scotland anticipate that prices will increase over the next three months. On a 12-month outlook, the net balance is +12%.
This follows a relatively flat picture for prices in the three months to the end of December, with a net balance of +2% of respondents reported.
This is compared to the UK average balance of -30% and continues a trend of improvement over the last three surveys.
Looking at demand, a net balance of -6% of respondents in Scotland reported a fall in new buyer enquiries. Although remaining in negative territory, this is the least negative this balance has been since February 2023.
Similarly, regarding new instructions to sell, surveyors in Scotland reported that supply levels were flat through the month of December, but this was the first time in two years that instructions to sell were not seen to fall.
Continuing the trend of a modest improvement, newly agreed sales were reported to have fallen at the slowest rate since July 2023.
Respondents in Scotland are more optimistic on the sales outlook with a net balance of +27% of respondents anticipating sales to rise over the first quarter of 2024.
The net balance for 12-month sales expectations is +30%.
Looking at the lettings market, the imbalance between demand and supply remained through December. Surveyors report that demand for lettings has risen, with a net balance of +29% of Scottish respondents reporting a rise.
Looking at landlord instructions, a net balance of -57% noted a fall in supply, falling from -13% the month previous.
With this supply and demand dynamic, a net balance of +43% of respondents in Scotland expect rents to increase in the three months ahead.
Commenting on the sales market, Greg Davidson, MRICS of Graham & Sibbald in Perth said: “The underlying market seems stable and the improving mortgage rates and inflation figures should help support a cautiously optimistic start to 2024″.
Marion Currie, AssocRICS, RICS Registered Valuer of Galbraith, in Dumfries & Galloway added: “The seasonal lull was as expected in December, but some interesting movement remained. However, moving into 2024 realistic pricing and managing seller expectations will be the best strategy in attracting buyers.”
Discussing the rental market, Craig Henderson, MRICS, of Graham & Sibbald LLP, in Ayrshire commented: “Landlords are seeing any properties they have available for let, being snapped up quickly by tenants.
“I believe that many landlords have exited the market in the last few years, and as a consequence, as demand increases, we will see rents rise markedly as rent restrictions on landlords come to an end.”
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