Current Housing Market in Argyll & Bute

Whilst the media are very keen to fanfare the strength of the UK housing market – and we have unquestionably seen an improvement in market conditions over the last 18 months when compared with the prior 4 years – we feel that the local market is presently being tempered by two key factors.

The first factor affecting the Scottish Property market is the upcoming Referendum. Regardless of which side of the fence you are on, (or even if you’re presently on the fence!) such a major political and geographical decision is unsurprisingly causing some uncertainly, which in turn, is tempering the market. This is particularly notable on the mid to higher end of the market which is often reliant on, or at least benefits from, outside money, i.e. those who come into the area from elsewhere. This effect is also being seen on any property which benefits from any aspect of tourism, such as holiday lets, B&B’s and hotels.

The second factor that is having an effect on the UK property market as a whole, is the increased tightening of lending criteria imposed by the Banks and Building Societies. In response to accusations of irresponsible lending in the past, Banks and Building Societies are now including “stress checks” as part of the mortgage assessment and approval process. This is a method of assessing, not just whether the applicant can afford their mortgage payments as things stand currently, but also what ‘safety margin’ there is in the applicant’s financing and the applicant’s ability to meet with mortgage repayments in the face of interest rate increases. As a result of this, buyers are finding that finance is that bit harder to obtain, thereby diminishing the pool of available buyers.

Looking specifically at the Oban and Argyll & Bute property market, there are some interesting statistics in the latest residential property figures released by Registers of Scotland in the two key measures in house sales, these being the average sale price and the volume of sales. What is particularly interesting are the regional differences in these figures when comparing Argyll & Bute to the rest of Scotland:

Prices
On the positive side, the average (mean) residential property prices for Argyll & Bute show an annual increase of 13.6%, which makes it one of the strongest regions in Scotland in this regard – bettered only by Clackmannanshire, Renfrewshire and the Shetland Islands – whereas the majority of other Scottish regions are reporting more modest increases somewhere in the 0.5% – 7.5% bracket. Indeed, Argyll & Bute increases are almost two and a half times the Scottish average.

Volume of Sales
Conversely, or perhaps as a result of the above, Argyll & Bute saw an annual increase in volume of residential sales of just 13.6% whereas the majority of other regions were in the higher 21% plus bracket, and Scotland as a whole 22.4%, suggesting a slower market in Argyll & Bute in comparison to the wider Scotland.

It might be expected that a strong market would show strong numbers in both respects however, rising prices will also temper sales, and the larger increase in prices in Argyll & Bute versus other regions, may well help to explain the relatively slower market.

Whatever the reasons behind the figures, we will be watching the Registers of Scotland figures for the next quarter with great interest!!