Very few investments can boast the same solid ROI as a house. The safety, security and well-being it brings to life for years and years are reassuring. However, when it comes to property values, some places fare better than others. Since the pandemic-led property boom, Scotland has become a haven for long-term residential investment, especially those spacious semi-detached and detached homes in the suburbs and beyond. Scottish house prices have remained steady and positive post-pandemic, weathering all economic storms. Comparably, Scotland has the most thriving property market in the UK. But what about 2024? Is buying a home still a viable investment?
Current outlook on the Scottish housing market
The Scottish housing market remained the most resilient through last year, with robust house prices. The rest of the UK, except Northern Ireland, experienced either static or falling housing prices, while Scotland recorded growth in value. According to Zoopla, Scotland recorded a 1.8% increase in house values in 2023.
Despite the negative headwinds from higher interest rates and inflation, buyers’ interest in securing a home was strong.
Detached houses and new builds had the highest growth rate in price, making them the best house types to invest in.
With no other interest rate hike expected and improving mortgage rates, more buyers will enter the property market this year. Professionals are predicting a solid recovery in home sales volumes. However, price falls are unlikely to happen as more sales get agreed on and cut to the base rate, which is not taking place yet.
According to the Royal Institution of Chartered Surveyors (RICS) Residential Market Survey, Scottish property prices will see a slow but steady increase in 2024. However, Scotland and the north are still the most affordable regions for buying property in the UK.
Mortgage rates
Lenders have reduced mortgage rates to stir up a low-activity market. In doing so, they expect interest rates to fall faster. Fixed mortgage rates are at their lowest level since 2022. Most major lenders now offer five-year fixed-rate deals below 5%.
The Bank of England hiked the base rate 14 times consecutively, starting at the end of 2021, to tackle inflation, causing mortgage rates to rise. However, the bank has not raised the base rate since August 2023. Experts believe the interest rate has peaked.
We are unlikely to see further rate rises anytime soon. Instead, a cut to the rate is what many anticipate. The Bank continues to maintain the 5.25% rate until inflation falls much further and stabilises. Financial markets are hopeful for the first cut in June, but it takes some time to impact the economy.
Improving mortgage rates and growing optimism in the economy have increased the confidence of buyers and lenders. Your mortgage has a better chance of approval this year. However, do not anticipate a sharp reduction in mortgage rates, as cuts to the base rate are yet to happen and inflation rates are still uncertain.
Hanging on for even lower mortgage rates that may only slash a few thousand pounds may not be worth the risk of losing the home you want to buy now. The new best mortgage rates will be significantly higher than we are used to.
Regulatory landscape
With prices in the rental market set to increase in 2024 with the rent cap ending on March 31st, more renters will look to enter Scotland’s housing market. As part of emergency measures to lessen the impact of the cost-of-living crisis, the Scottish Government set a 3% temporary cap on rent increases during private tenancies. It prompted a supply shortage in the rental market as many landlords have exited the market due to the rent cap. More first-time buyers will take the opportunity to assess their position to buy.
The new energy efficiency and EPC ratings may also influence activities in the Scottish property market. Buyers will likely consider the benefits of brand-new homes built to environmental standards, and owners of older properties, especially seniors, will evaluate the cost and work of retrofitting vs moving into a new energy-efficient home. The cost-of-living crisis highlighted the importance of energy-efficient heating systems that would cut heating bills.
Demand
Properties in rural and coastal areas in Scotland are still gaining attention. Their affordability relative to size, quieter lifestyles, picturesque locations and commuting opportunities interest many buyers who have reassessed priorities post-pandemic. Those with deeper pockets are also looking to Scotland to fulfil their property dreams that fit this bill.
Scotland is now the most ‘searched for’ location on Savills website outside London, attracting prime property buyers from all over the UK and the world.
Demographic and behavioural changes
Remote working opportunities and preference for bigger spaces still influence ongoing demand for homes. Upsizing in the country has become a more lucrative option for those wanting a more subdued lifestyle with space for families with children.
The ageing population is also looking for a slow-paced life in the country and the chance to downsize. According to the latest census data, Scotland is ageing at the fastest rate on record. Its 65+ population is up by 22.5%. There are more people aged 65 and over than those under 15.
Most seniors and retirees prefer to downsize and move to the country. One of the worst afflictions that affects the ageing population is loneliness. Developments in rural Scotland provide a haven for the elderly, providing community, amenities and suitable housing.
Invest in a well-placed and well-appointed GS Brown home
With pressures gradually easing off buyers, lenders, the property market and the economy, 2024 is a more affordable year to buy a home. While the future will always remain uncertain, a home will always be the best investment you can make to safeguard yourself from uncertain times. Scottish properties have a robust track record of retaining their value over time.
Whether you are looking for space for a family or peace in retirement, we have chosen our locations, specifications and craftsmanship for a comfortable life. Energy efficiency, modern layouts, natural lighting, high functionality, and intelligent design of GS Brown developments are worth every penny you spend. How would you like to buy a brand-new home this year?
