Will 2024 be a good time to buy property in Edinburgh and the Lothians?

Happy New Year!

Each new year always brings a raft of ‘UK Property Market’ predictions in the mainstream press, with many this year offering a more tempered outlook for the year ahead than they did in January 2023. Put simply, the “30% fall of UK house prices” quoted in many clickbait headlines last year just didn’t happen. In fact, Nationwide one of the UK’s biggest mortgage lenders stated that property prices in Scotland actually increased in 2023 whilst overall the decrease in property prices UK wide was just 1.8%.

For local homebuyers, it can be difficult to debunk the 2024 headlines with some predicting falls in some parts of the country and growth in others. We’d maintain that there is no such thing as the UK Property Market, rather there is a patchwork of small, local property markets across the UK and Northern Ireland each with its own unique drivers and dynamics.

If the last few years have taught us anything, it’s that crystal ball predictions of the future are best ignored in favour of accurate up to the minute facts and careful consideration of your own property needs. At Neilsons, we sell 1 in 10 properties in our area, so we have our finger firmly on the pulse of our local property market, and we offer free consultations so we can tailor our advice to your specific circumstances.

There are a number of reasons why the ‘crash’ didn’t happen despite the gloomy economic outlook, but a significant part has been played by lower repossession numbers than some expected. This is because homebuyers who benefitted from low fixed mortgage rates had their mortgage applications ‘stress tested’ for affordability at much higher rates. So although the big jump in rates has been an uncomfortable ‘cost of living’ squeeze for many who’ve needed to remortgage over the past year, for the most part, it hasn’t meant they’ve had to sell. It’s also meant that many who would have moved to level up the property ladder at the end of their mortgage rate have instead stayed put, so market activity has been calmer than in the preceding years.

It’s also worth noting that Zoopla, one of the UK’s biggest property portals, have reported that one third of UK properties sold in 2023 were sold to cash buyers, for whom interest rates and the mortgage market have little or no significance. That said, the mortgage market is a key driver of the property market and encouragingly, there are much better rates available at all levels of loan-to-value (LTV) than there were 12 months ago, with Moneyfacts reporting in December that there were 254 95% LTV products available compared to just 141 in December 2022. A recent poll of 41 economic experts by The Times found that most predict two cuts to the Bank of England Base Rate (currently 5.25%) in 2024, whilst nearly half of those polled said there would be 3 or more cuts! Andrew Bailey, Governor of the Bank of England said it was too early to consider a reduction, but it certainly looks to be on the cards later in the year as The Bank of England have recently confirmed on a Rightmove seminar for estate agents, which is good news for mortgage borrowers.

2024 will almost certainly be a General Election year. Conservative insiders are reported to suggest than the election will be in the Autumn, giving the government plenty of time to win votes by hitting their inflation target of 2%. It’s already fallen ahead of schedule to 3.9% which has had noticeable stimulation of the mortgage market. Smaller lender GenH is offering a 5-year fixed rate of just 3.99% for 60% LTV mortgages. Major lender HSBC has announced a similar deal at just 3.94% which other lenders are sure to follow.  Whilst housing policy is devolved, and we’ll wait until 2026 for an interesting Scottish Parliament Election, elements of the UK government’s policies are sure to affect the mortgage market and will therefore have an impact locally.  Housing policy is likely to be a key battleground between the main Conservative and Labour parties. Policies for First Time Buyers – often announced at the drop of a hat in the run up to election day – are likely to be given significant weight as each party tries to woo voters from the younger electorate. UK Government Housing Minister Michael Gove has already hinted in an interview with The Times that they want to do something to help those with good incomes but low deposits on to the property ladder. Any such policies will put pressure on the SNP to do similar in Scotland.

Another key policy which could have a significant impact on the Edinburgh market is the Labour Party’s intention to add VAT to privates school fees. With 1 in 4 Edinburgh children attending private schools, this could see property prices in catchment areas of highly regarded local authority schools soar.

Historically, General Elections cause the market to calm as buyers and sellers wait to see what the outcome will be before deciding when to move, so the calmer pace of the market in 2023 compared to the post-pandemic boom years is likely to continue in the short term in 2024.

Nonetheless, the driving factors of the Edinburgh and the Lothians market remain the same – a global capital city offering a superb quality of life, enhanced by good employment prospects, access to world-class amenities and recreation facilities plus renowned educational institutions meaning that our population will continue to grow. Population expansion for Edinburgh and the Lothians is projected to be 75% of that for the whole of Scotland over the next few years. Edinburgh is a geographically small city, hemmed in by the Pentland Hills to the south and Firth of Forth to the north, there is a finite amount of property in central locations so you can see that demand will continue to outstrip supply, pushing house prices upwards over time.

It’s unlikely that those buying in 2024 will also find themselves selling that same property in 2024 – a report in 2018 showed that the average Scottish homeowner stays put for 14.5 years! So if you’re thinking of buying a property in 2024 it remains the case that you should think about the lifestyle you want to have as well as the property you want to have it in and how your home needs might change over the next 2, 5, 10, 14.5 years. Giving consideration to the tax and fees that you’ll pay in addition to the purchase price can have a significant impact on what you decide to buy and where. There’s a lot more choice available to first time buyers than there has been in recent years with the short term let legislation that came in to effect last autumn and the 6% additional tax to LBTT for second home owners keeping some investors at bay. The rental market is suffering from a stifled supply as a result and in many cases, for those who can get a deposit together, it will be cheaper to buy and pay a mortgage than it is to rent.

Those looking to sell a property in Edinburgh and the Lothians in 2024 are likely to have an easier time of it than those who sold in 2023. The stimulation of the mortgage market with new lower rates will certainly widen the pool of buyers looking. It’s likely to remain a price-sensitive market in the run up to the General Election and the huge jumps over Home Report value being paid commonly from 2020 to 2022 will likely only apply in unique circumstances. If you’re looking to sell and buy in the same market then this will be a good year to do that, the calmer pace and better balance of supply and demand will make transactions significantly less stressful than they were in the immediate post-pandemic years. Accurately valued and professionally marketed properties, like those sold by us at Neilsons, have every chance of success on the market. Properties sold by ESPC Solicitor Estate Agents like Neilsons achieve an average of 3% more than those sold by independent (non-ESPC) firms. We are a chartered and founding member of the ESPC which is an Edinburgh institution now in its 53rd year, and the confirmed 1st portal of choice for buyers. Neilsons offer this vital marketing through espc.com as well as the major UK-wide portals of Rightmove and Zoopla, so make sure you ask your proposed agent if they are chartered ESPC members. Neilsons have also won more awards for excellence and have more five-star reviews than any other Solicitor Estate Agent!

We hope this blog sets your property journey in 2024 off on the right foot, Neilsons are here to help. You can book a free purchase consultation here and if you’re looking to sell as well as buy, then booking our free valuation service here will give you tailored advice on making the most of your move.

Book a free consultation with Neilsons here!