COVID-19 rocking the Scottish property market
Dr John Boyle looks the impact that current pandemic is having on the Scottish property market and highlights that the longer the lockdown goes on, the tougher the recovery will be. For more details, read the Rettie & Co briefing.
The Scottish housing market has been affected by the COVID-19 pandemic, as has everything else.
The Registers of Scotland effectively (and suddenly) shut down operations a few weeks ago, placing much of the Scottish housing sales market on hold.
How deep will this hit? Experiences from other housing markets hit by public health outbreaks suggest transactions rather than values see the immediate fall. Transaction falls during major crises, including the 2008/09 recession, are typically between 40% to 70%. However, in Scotland, the number of new properties listed for sale in the first week of April has already dropped 90% year-on-year. In terms of the almost immediate total loss of market activity, this looks like being a crash like no other.
There are also significant changes rapidly happening in the rental sector. In the short-term rental sector, Airbnb has seen a 27% fall in available listings in Edinburgh between Q4 2019 and March 2020. Meanwhile, listings in Edinburgh on Citylets for long-term rentals are up almost 50% this year, and 119% at the start of March. Given incoming new regulations for the short-term rental sector, this switch back to long-term rent was expected this year but the pandemic has accelerated this massively.
It is difficult to see when circumstances will be back to normal until there is a date for the end of the lockdown. The economic fundamentals of the Scottish housing market were relatively strong before the crisis (for example, there was higher than expected price growth of 4.2% at the start of the year). This should help once we go into the recovery phase, but the longer the lockdown lasts, the more difficult it is going to be to come out of the trough.
Dr John Boyle is Director of Research & Strategy at Rettie & Co.
Date: April 15, 2020 3:00 pm
Author(s): John Boyle
Categorised in: Markets