House prices in Scotland continue to rise due to lack of supply

homes for saleA shortage of supply of homes to buy in Scotland has continued to cause affordability challenges, according to a new survey.

The January 2017 UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) revealed that 30% of respondents reported a rise in house prices than a fall, down slightly from 32% in December.

The report said a key factor for this was the lack of supply, but it reiterated prices were expected to rise across Scotland over the next three and 12-month forecasts.

In January, new landlord instructions in the Scottish lettings market failed to improve for a sixth consecutive quarter. Moreover, with respondents predicting that landlords will look to decrease the size of their portfolios across the UK as a whole over the next three years, this issue would worsen over the medium term.

During the three months to January, tenant demand for rental properties continued to increase at the national level with the continued imbalance between supply and demand expected to squeeze rents higher. The exceptions to this pattern across the UK are to be found in London and Scotland where tenant demand is slipping back a little and with rent expectations essentially remaining flat in Scotland.

Simon Rubinsohn, RICS chief economist, said: “The scale of the challenge the UK government faces as it announces its new approach to housing is clearly demonstrated in the results from our latest survey.

“Not only are the headline price and rent series pointing to further increases over the course of this year, but more significantly, the medium term view of RICS professionals working up and down the country is that both house prices and rents will, over the medium term, continue to grow at a faster pace than wages putting even greater pressure on affordability.

“Whether the measures announced can ease this trend remains to be seen.”

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