What Is Happening In The Glasgow Property Market?

Last updated: 2.00pm, Monday 18th May 2020 by

We have a close look at what is happening now in the Glasgow property marketplace and its reasons for still being robust.

By Gordon Campbell
5th May 2020
 

The elephant in the room at the moment is what impact will COVID-19 have on the economy and the property market.

That is the question all property investors, and those thinking of investing, have on their mind at the moment.

Lockdowns are gradually being relaxed across many parts of Europe and the World.

These green shoots of life returning to normal give us all a little hope and optimism for the future.

And talking of the future, we’ve dusted off our crystal ball to look at how the property market in Glasgow might change once this is all over.

 

What’s Happening at the Moment With House Prices in Glasgow?

There has been zero impact on property values.

Yes, the sector has been hit by government stay-at-home measures for agents, surveyors and prospective buyers, combined with a backlog in applications caused by the Registers of Scotlandsuspension, but the local agents, surveyors and industry commentators expect the market will return to pre-COVID-19 levels. 

Mr Denton, who represents Scotland on UK Finance’s Mortgages Board, commented last week:

 “I think in Scotland’s £18 billion pound housing market there will be two waves of bounce back.

The first, when Registers of Scotland fully reopens and starts clearing the backlog of applications from solicitors.

And the second when social isolation measures ease and consumer confidence starts to grow.

“It is clear that the drop in sales volume is driven by social isolation and not a lack of demand from customers.”

 

 What About Prices?

The average price of a property in Scotland in February 2020 was £150,524 – a year-on-year increase of 2.5%, according to statistics from the UK House Price Index released this week.

The UK average house price was £230,332 – up only 1.1% 

The largest decrease was recorded in City of Aberdeen, where the average price fell by 3.6% to £143,990. The highest-priced area was City of Edinburgh, where the average price of a house is £270,864. 

The volume of residential sales in Scotland in December 2019 was 7,984, up 8.0%

These statistics pre-date COVID-19 but reinforce the trend of Scottish house prices rising faster than the rest of the UK as demand outstrips supply.

However, there are marked geographical differences too, with the challenges in the oil and gas sector impacting the Aberdeen market.

 

Has Glasgow a Different Market to the Rest of Scotland and the UK?

Yes. It does

 

Part of that is about looking at all of the markets and seeing the differences.

There has never been a UK market.

There are UK markets.

 

A lot of people talk about "The property market" as if the UK was one market. 

It is not.

There are at least 6 major UK markets The South of England, The North of England, Northern Ireland, Scotland, Wales and of course the London market.

Each of these markets are likely to be impacted differently, and to different degrees by the fallout from the coronavirus.

 

Many of the articles and much of the research on the residential property market, and their projections are based on The South of England and the London market. Because that is seen to represent the UK market.

 If We look at prices in some parts of the UK we are still seeing price stability like Glasgow.

 This is because the market prices are based on real reasons for price stability.

 

Why Are The Glasgow House Prices Still Stable?

 Each of these regions in the UK and Scotland have their own micro markets.

A city, town or village may have a new school, new large employer, rail or road link that will give the house market a boost. Even in these conditions.

 

Aberdeen for example- mentioned previously above – relies on oil and not much else.

The oil price has dropped to less than a pack of toilet rolls and there will be potentially 30,000 jobs lost in Aberdeen as a result.

The impact of that on house prices, demand and the rental market in Aberdeen will become will be very tough.

 

That is why you cannot compare what is happening in any other country e.g. USA or a city or town in the UK as they are all different with different economic and socio demographics that influence the micro economy.

Why Is The Glasgow Market Different?

Glasgow weathered the storm during the 2008 financial crisis. We know this is on a different scale, but the underlying market is resilient and very sure that property market demand will see the market bounce back to something near the levels we saw at the beginning of the year.

The fundamentals of the Glasgow diverse economy and its property market are strong, nothing has changed in that regard.

Key Facts

  • 8m people live in the Greater Glasgow Metropolitan Area
  • 4thlargest city in the UK
  • 2ndFinancial Capital of the UK
  • 2ndBest Shopping Destination in UK
  • Leading city for Medical Research, Space Technology, IT, Renewable Energy
  • Leading International Sport, Conference and Concert Venue
  • Continued massive infrastructure and jobs growth.
  • Recently voted by the age group Millennials as Best City in UK to Live

 

What About Property Type and  Demand in Glasgow?

Despite a declining level of new rental stock entering the Glasgow market, there has been a growing demand  in Glasgow due to its economic strength.

It has seen the average rent climb by an annual average of 4% each year since 2015, now at £743 a month compared to £627 in 2015. 

 

We confidently predict that due to the current pandemic could result in a much larger increase in demand from new tenants entering the market, mainly in the Buy to Let Market.

 

Why is The Buy To Let Market Set To Grow in Demand in Glasgow?

 A number of reasons:

  • The diversity of the Glasgow economic market as stated above.
  • The change in living conditions people will want to live in driven by social distancing. e.g. Serviced Accommodation, HMO, Multi Lets will be impacted significantly.
  • That will drive the demand for tenants to have their own accommodation which will be Buy to Let .
  • Personal relationships will have changed during the lockdown and causes break ups and a demand for separate accommodation to buy and rent.
  • There is a huge pent up demand of enquires in Glasgow for viewings to purchase and rent.
  • The confidence in the local economy, housing market will continue to drive demand to pre COVID levels.

 

Final Word

Property investment is about time in the market, rather than timing the market.

Property is a long-term investment.

 

Alliance Property Group offers a unique service of Off Market properties in a good location, at a great below market value price, in good condition and an area where there will continue to be demand for your properties, regardless of the economic cycle.

 

We share our 35 years’ experience as proven and successful Buy to Let investors and landlords, knowledge and partnering teams and help you create wealth and income.

 

Now is the right time to invest In Glasgow Buy to Let property more than ever before.

 

In the words of Warren Buffett;

 ‘be fearful when others are greedy and be greedy only when others are fearful’.