Scotland's Housing Market Well-Placed To Weather Tough Times
The announcement (10 August) by the Scottish Government of a new economic stimulus package which will accelerate spending on infrastructure projects in Scotland post-Brexit is very welcome news.
Homes for Scotland Chief Executive, Nicola Barclay, reacted quickly to the announcement: encouraging the Government to focus on prioritising the delivery of more new homes, given the significant social and economic benefits that such investment delivers (on the basis that every new home built in Scotland supports four jobs and helps boost economic growth through the supply chain).
Few can doubt the Scottish Government’s commitment to addressing the under supply of new homes in Scotland, particularly in relation to the provision of affordable homes where there are many different forms of public support to address this under supply (both directly and indirectly).
But what of the post-Brexit housebuilding landscape in Scotland? As a judge on the panel for this year’s Herald Property Awards for Scotland (in association with Burness Paull), I have had the privilege of visiting 22 recently completed development projects across Scotland over the course of the summer. Projects range from those in the urban regeneration category to affordable housing developments, as well as new developments by private housebuilders.
Interestingly, across the Central Belt, the demand for new homes appears to be remaining healthy post-Brexit. Universally, the sales teams that I have met on each private residential development have been able to demonstrate that sales rates and visitor numbers to their developments remain just as healthy post-Brexit as they were in the same period in 2015. This is supported, anecdotally, by many other conversations I have had with those at the coalface of residential development. With so many economic bad news stories around, the positive individual stories I heard – largely of ‘business as usual’ and sometimes better - were very welcome.
It appears to me that whilst the fundamentals of the housing market remain unchanged – namely, an under supply of new homes and real demand from buyers who, generally, have no issue getting a mortgage (provided they have some equity), then there is no reason why our appetite for new homes should diminish.
The lack of supply will take time to correct through the planning and delivery process. Skills (and sometimes materials) are in limited supply. There are, of course, macro economic events that could alter that dynamic (as seen in Aberdeen in relation to the drop in the oil price) and, possibly, a second Scottish independence referendum. However, in the post-Brexit period, housebuilders appear to be undaunted (despite fluctuating share prices of the major plc builders) and still have a strong appetite for acquiring new sites in the right locations.
For a desk/ meeting bound lawyer it has been liberating to visit all of the different entries I have been asked to judge for the Awards. Universally what has struck me (as it did last year when I joined the judging panel) is the dynamism, determination and enthusiasm of the people that work in the house building industry. This is often reflected, for example, in the obvious pride that a local community takes in a regeneration project led by an affordable housing provider. The quality of entries, the pleasure people take in the work they do, the standard of construction and the resilience of the industry really stand out. We have weathered tough times together before, and can do so again.
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