Edinburgh braces for housing market lull after Brexit vote

A buyer peruses the properties available in the ESPC shop in George Street. Picture: Jane Barlow

But property experts dismissed Chancellor George Osborne’s claim during the referendum campaign that property prices could plummet by as much as 20 per cent.

ESPC, the Capital’s biggest property marketing company, played down reports of deals having fallen through as a result of the Brexit vote and insisted the market was “robust”.

But there remain uncertainties over the effect of the referendum on consumer confidence, mortgage availability, interest rates and levels of housebuilding. Housebuilders were among those to see the biggest immediate fall in their share price after the Brexit vote, which was seen as reflecting fears of a decline in prices.

And a slowdown in construction could hit the drive to meet the current housing shortage.

Meanwhile, a cut in interest rates could be good news for homebuyers – but there is no guarantee lenders will respond with favourable loan deals.

And experts have warned rates could rise if the falling pound leads to an increase in inflation.

David Alexander, of city estate agents DJ Alexander, acknowledged there was uncertainty at the moment but said he was confident the market would stabilise.

He said: “Some people have decided not to sell and some people have decided not to buy. But people still need homes to live in.”

He argued the weaker pound could have a positive effect. “For overseas investors this becomes a very attractive place to invest. A week ago you would have a lot less for your dollar or euro, but now people with overseas currencies will get a lot more.”

But he said fear of recession could mean the market “dried up” for a spell. “If you’re worried about being made redundant the last thing you’re going to be doing is coming home and saying to your wife ‘Why don’t we move house?’”

He rejected Mr Osborne’s prediction of a 20 per cent fall in house prices, adding: “I think that was part of the fear tactics, I don’t see that happening at all.”

Mr Alexander said he believed the Brexit vote meant there was now likely to be a Yes vote in a second independence referendum, which could have a serious impact on the housing market. I think that’s potentially a bigger factor for the property market,” he said. “We saw in the run-up to the last independence referendum a lot of people sat on their hands.

“There was a big slowdown and if there is to be another in the next two years that could have a bigger effect on the market in Edinburgh and Scotland.”

ESPC said the housing market in east central Scotland was particularly resilient.

It said that, over the past year, the market had been in favour of the seller and forecast that demand for property would keep the market steady.

It also pointed out that, while the 2008 financial crisis saw sales volumes fall significantly, average residential property prices had remained steady.

ESPC chief executive Paul Hilton said: “We haven’t heard any concerns over buyers pulling out of purchasing a property and in fact some solicitors have actually reported more interest from buyers. This could be due to a belief that it is now an opportune moment to purchase a property.”

He said that, so far this year, the number of houses available was down 25 per cent on last year. “So with this shortage of supply and the likely summer dip in properties coming to market, we expect a continued strong sellers’ market,” he added. “

History has shown that the housing market in east central Scotland is remarkably robust. Property values were not as affected by the housing market crash during the global recession as other areas of the UK, so it will likely stabilise once the effects of leaving the EU are determined.”

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