It would be fair to say that the Scottish property market has been truly tested in 2016. From tax changes and continued austerity measures, to a weaker pound and the looming uncertainty of Brexit, there are many issues that could have resulted in disappointing figures this year. And yet, the market has proven to be surprisingly resilient. Here, we take a look at some of the top events that impacted the property market in 2016 and consider the current state of affairs as we near the end of the year.

Brexit

What is it?

The historic vote in the EU Referendum earlier this year was expected to have an impact on the property market, but that is yet to be seen.

How is it impacting the housing market?

As we have not technically left the EU yet, it is hard to give a concrete answer on the effects Brexit has on the property market. However, the value of the pound has been somewhat volatile since the news broke. With banks acting more cautiously in the wake of the uncertainty, it could be proving harder for people to get their mortgage applications  approved. That being said, there has been no slow down in activity at Clyde Property in 2016, with affordable mortgages and growing demand fueling the market.

Tax changes for second homes

What is it?

Earlier this year, with laws slightly different to down south, the Land and Buildings Transaction Tax (LBTT) came into force on April 1. Said to be the Scottish equivalent of the Stamp Duty Tax, homeowners looking to buy any additional property, such as a second home or a buy-to-let property that costs more than £40,000, are now subject to a new 3% tax supplement, hitting many buyers financially.

How is it impacting the housing market?

Overall, it’s perhaps too soon to tell what lasting effect this could have on buyers who would consider buying second properties, or buy-to-let properties. However, a positive effect of the tax implementation was a big surge in house buying in the first quarter of 2016. According to Property Investor News, there was a 13.5% rise in the number of house purchase loans lodged and accepted when compared to the same period in 2015. Clyde Property is yet to see a downturn in investor landlords coming to the market, particularly given the record low interest rates, which we turn to next.

Interest rate changes

What is it?

The Bank of England’s Governor, Mark Carney, shook up the markets this year when he announced a further drop in the already low interest rates in the UK. The first drop since 2009, rates were slashed from 0.50% to a record low of 0.25%.

How is it impacting the housing market?

Lower interest rates have resulted in generally lower rates for mortgages. With your money in the bank now earning less than ever before, investment in property is the obvious choice for anyone looking for a better return, despite the second home property tax – something Clyde Property has discussed extensively with investors and landlords this year.

With the interest rate changes, the bank included a £100bn scheme, which forced high street banks to pass on the benefits of lower rates to businesses and households. Therefore, the potential for lower mortgage rates has been made all the more possible, as long as you shop around for the best deal. While some may take advantage of the very low tracker mortgages, which can rise if market conditions change, even the safer bet fixed-rate mortgages remain relatively low compared to other years.

Help to Buy schemes

What is it?

In an effort to address the growing issue of first time buyers struggling to get onto the property ladder, the Government has introduced a series of measures to aid those who dream of owning their own home. In short, the Help To Buy cash ISA encourages people to save, as the Government will boost savings by 25%. For example, if somebody chooses to save the maximum £200 per month, the Government will contribute £50 per month. However, there are limitations – the maximum Government bonus is capped at £3,000, and this contribution can only be claimed in the event of buying a first-time home.

How is it impacting the housing market?

According to leading newspapers, such as The Guardian and The Telegraph, over 500,000 Help To Buy ISA’s have been opened, signaling what likely remains a small portion of the hopeful buyers who are eager to get onto the market. This also highlights that there remains significant demand across Scotland for first-time properties, such as 1-2 bedroom flats and houses.

An overview

In spite of its challenges, 2016 has been a good year for the property market, with growth in average property prices comparable to levels before 2008. According to The Royal Institution of Chartered Surveyors (RICS), 17% more surveyors have reported house price increases following the Brexit vote, signalling the strength of the market. This increase matches Clyde Property’s own experience – currently, buyers far surpass the number of sellers and with affordable mortgages that allow them to find that next dream home, which further pushes up prices and activity on the market.

Overall, 2016 has been an outstanding year for Clyde Property. Our Edinburgh office opened earlier this year with resounding success, taking the local market by storm. Add in our successful Clyde Property Spain service, our new augmented reality app, our updated website and our unrivalled seven days a week service with experts on hand, it is clear to see that 2016 has remained largely positive for both Clyde Property and the Scottish housing market as a whole.

Clyde Property is a leading independent, multiple award winning estate and letting agent with 30 years’ experience in selling and letting property in Scotland. Just call your local Clyde Property branch today, for friendly, impartial advice on finding your next dream home.