Opinion: Property market buzzing while scenery is still key
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What a year. Even among grizzled property market professionals who have campaigned through recessions, slumps and banking crises, few have experienced anything like the dramatic peaks and troughs of the Covid-19 Year.
Now that the tide of battle appears to be turning in our favour, it is perhaps time to take stock and consider what the altered landscape of the future will look like.
At first glance, it appears that Inverness and the Highlands – from Caithness to Oban – have come through not only unscathed, but in relatively good shape.
In fact, Inverness was one the best-performing cities in Scotland in the 12 months to October 2020, according to Bank of Scotland, with the average house price rising by £15,000, or 8.1 per cent, to £195,000. This contrasts starkly with Aberdeen, where prices fell by 1.4 per cent.
There is little doubt that the very satisfying growth in the Highland area has been driven by outside money. Despite rising prices, the region is still remarkably cheap compared to other parts of the UK, and people with oodles of buying power have been circling since March last year.
This inflow has been brought to the boil by sustained local demand and a continuing shortage of quality properties, leading to an environment in which sales are going to very quick closing dates and conclusions, with noticeable price inflation.
Developments by housebuilders such as Tulloch Homes and Springfield Properties are oversubscribed, and executives of both firms have been calling on local authorities to work closely with them to address the north’s housing shortage.
But, for a number of reasons, the market is at a significant disconnect from the local economy.
The worry is that, while the outlook for property looks rosy at the moment, hostilities could recommence as the year wears on and the people who have been furloughed become redundant, depressing the pool of aspirational buyers.
The closure of Debenhams has, as in other towns, been a major setback and chill winds are blowing through the rest of the retail sector.
These things matter. Tourism and retail attract visitors to the city: they spend their money, create local wealth and allow local people to participate in the property market. Without them, the outlook is cloudy.
Of course, many workers in retail have transferable skills and could find employment in hospitality and leisure.
Like every other aspect of business, the property sector needs some degree of certainty to allow it to plan for the future and not be subject to arbitrary shocks which pull the rug from under it.
The market is buoyant at the moment, but prudence and caution are faithful allies in uncertain times and we have to remain aware of the bigger picture, conscious that forces outwith the immediate area could have a dramatic effect.
The upside is that, for all this year of turbulence, the scenery has not changed. People want homes here because it is a lovely place to live. That is what will see us through.
Graham Forbes is a partner in the Inverness office of DM Hall Chartered Surveyors.
