OFFPLAN NEWS

(04.06.2007 )
Property in Scotland New Market, New Experiences: Scotland

To claim that Scotland has a relatively new real estate market is somewhat misleading because unlike the eastern half of Europe this northern part of Britain never abolished nor tried to abolish the private property. Yet such title makes sense because unlike other parts of Britain and Western Europe Scotland just 10-15 years ago was predominantly a country of tenants with majority of housings owned by local authorities. The private ownership on residential properties being something relatively new as social and economic experience for many Scots, the recent real estate boom is also something without analogue in history. Some look skeptically on the market bubble waiting for burst or at least for painful corrections. Others are more confident and look for good examples at Southeast England. The question remains not only whether Scottish real estate may soon go down but also whether this downturn may be influenced by more powerful English market.
During the last 12 months property prices in Scotland have risen by 20-25% according to most experts, reaching $190,000 for the country in general and $250,000 for the most expensive city of Edinburgh*. In Scotland the prices have doubled during the last 4-5 years. The average housing already amounts to 6 annual household incomes, which makes prudent Scots a little nervous. Some predict coming Armageddon, market crash similar to that in London 10-15 years ago. They point out at dangerously rising interest rates that approach the levels of late 1980's when the previous crash in London began. For those who expect crash some more moderate market correction of 10-15% will be a real blessing. The picture as they see it is much darker. They talk about the market as a pyramid financial scheme that will ruin the savings of the general population.
On the other side of the frontline are the financial optimists, a kind of everything-will-be-fine people, who point at the current good figures as if they could help against the dark prophecies of the pessimists. They also show the increased interest by the English investors, which gradually turn their attention from the more expensive southern parts of Britain toward less expensive and more promising Scotland. Optimists also see increased interest of other foreign investors, Russian oligarchs and Arab sheikhs alike.
Entering the second half of 2004 two major questions hunt the Scottish experts. How far the market can go without corrections? Can England and to which extent influence the market development in Scotland? On the first question apart from the two extreme optimist and pessimist forecasts we can see as equally realistic some moderate market corrections in 2005-2006, more moderate because of the more moderate market development than in Southeast England. With more luck this correction could pass as stagnation in absolute terms while other prices' developments make properties relatively cheaper. The answer on the second question is rather positive given the interdependence between two markets and relative size of each of them. The near future of the Scottish real estate market depends on the developments in England and Wales.

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»(04.06.2007 ) Property in Scotland New Market, New Experiences: Scotland
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