Simon Jackson is Managing Director of SDL Surveying
If we look at the latest data, it looks like there is something of an anomaly in the Scottish housing market.
While Scottish properties have been selling faster than their English and Welsh counterparts for some time now, we are currently seeing sales times that are almost 50% quicker.
Rightmove’s October House Price Index shows that it takes, on average, just 31 days to sell a property north of the border, significantly less than the durations seen in most other UK regions, where the average time is around 59 days. This increases to 66 days in Wales and 65 days for London and the East Midlands.
Other data also indicates that, for now at least, the Scottish market appears to be performing better.
Rightmove’s figures show that while Scottish house prices fell by 1.5% during October, against a wider UK increase of 0.5%, year-on-year, Scottish prices have climbed 0.5%, in contrast to the national average decline of 0.8%.
Significant drops
Listings in Scotland have also remained strong. The Q3 Residential Property Trends Report from the Landmark Information Group shows a 12% increase in August and a 5% increase in September compared to the same period in 2019. This contrasts with just a 2% and 3% increase during the same periods in England and Wales.
While all of Scotland, England and Wales continued to see ‘sold subject to contract’ volumes below those of Q3 2019, in England and Wales volumes are down by 36%, whereas in Scotland, they have decreased by just 22%.
It is a similar picture in the mortgage market. While there is a slight lag in the data, the latest figures from the Scottish Government show first-time buyer (FTB) mortgages were down by 9.6% year-on-year in Q2 2023, while home mover mortgages decreased by 11.8%. In contrast, the wider UK market experienced more significant drops, with a 28% decline for FTB mortgages and a 30% decrease for home mover mortgages, according to UK Finance.
There are of course a couple of distinct differences between the two markets, with the first being that since 2008, Scotland has had the Home Report.
In Scotland, all sellers are obligated to provide prospective buyers with the Home Report within nine days of them requesting it. The report comprises three components: a single survey and valuation, a property questionnaire, and an energy report.
This makes all the essential and relevant information about the property available upfront, including details about its overall condition, any necessary repairs and a valuation conducted by a chartered surveyor. Suffice to say, this approach significantly reduces the risk of down valuations further down the line.
Cut-off date
Collating all this information at the outset and making it available to all parties could, in part, explain why Scottish homes sell in a quicker timeframe. That’s certainly the argument made by those who are advocating for upfront information within England and Wales.
In addition to the Home Report however, there are also significant differences in the legal system in Scotland. There is a concerted effort to reduce ‘gazumping’. In Scotland, buyers often engage in ‘blind bidding,’ with the seller setting a cut-off date for offers.
Offers are made to the seller’s solicitor and once an offer is accepted, the property is removed from the market, and sellers rarely go back on their word. If the seller attempts to accept another offer, this requires finding a new solicitor under Scottish law, leading to additional costs and time.
Once an offer is accepted and terms are agreed upon, if the buyer attempts to withdraw, the seller may also impose substantial financial damages, which, once again, serves as an incentive not to pull out.
Given these contrasting systems, it’s perhaps not surprising that we are seeing such a stark difference in property selling times.
While its challenging to pinpoint whether the improved market and shorter sale times result from the Home Report, the legal system, or a combination of both, if current market disparities persist, it does raise the question of whether a similar system could be beneficial in England and Wales?
References:
https://www.rightmove.co.uk/news/house-price-index/
https://www.gov.scot/publications/scottish-housing-market-review-q3-2023/pages/6/
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