Survey reveals slump in buyer demand as property professionals forecast price and sale increases
The Scottish housing market showed signs of renewed volatility in February as a key survey recorded a sharp dip in buyer demand, even as surveyors maintain a broadly optimistic outlook for the coming year.
According to the latest Royal Institution of Chartered Surveyors (Rics) Residential Market Survey, a net balance of -8% of Scottish respondents reported a fall in new buyer enquiries. This marks a significant swing from the positive balance of +18% seen in January and represents the lowest reading since mid-2024.
This cooling in demand at the start of the year stands in contrast to broader UK figures, which showed a second successive month of positive growth in buyer enquiries with a net balance of +6%. However, the decline in Scotland coincided with a dip in fresh instructions to sell, where the net balance reporting an increase fell to 8% from 27% the previous month.
Sales momentum and price resilience
Despite the fall in demand, the market demonstrated underlying resilience. A net balance of 7% of Scottish surveyors reported a rise in newly agreed sales in February—the second consecutive month of positive growth. This aligns with UK-wide data from HM Revenue & Customs showing an estimated 82,940 residential property transactions in February, albeit 6.1% lower than the year before.
Scottish surveyors remain confident about the near future, with a net balance of 39% anticipating sales will rise over the next three months. Across the UK, the 12-month sales outlook is even stronger, with a net balance of +42% expecting activity to gain momentum.
On prices, a net 28% of Scottish respondents reported house price increases over the past three months, though the rate of growth slowed from January. Looking ahead, a net balance of 24% expect prices to continue rising over the next quarter. This local optimism is supported by official data from the UK House Price Index, which recorded a 5.6% annual increase in average Scottish house prices to £188,000 in February, outperforming a slight UK-wide annual decrease of 0.2%.
Regional variations were noted, with Rics reporting firmer price trends in Scotland, Northern Ireland, and the North West of England, while London, the South East and East Anglia faced downward pressure. Property portal Zoopla’s data also pointed to Scottish price resilience, showing a +2.2% annual rise for February.
Geopolitics and mortgage rates weigh on sentiment
Rics analysts attributed the renewed market volatility to external economic and geopolitical pressures. Tarrant Parsons, head of market research and analytics at Rics, stated that the deterioration in the geopolitical backdrop, linked to concerns over the Middle East conflict, had “clearly weighed on confidence.”
He also highlighted that recent rises in oil and energy prices had increased the likelihood that mortgage rates would “remain higher for longer,” leading to softer near-term expectations. This volatility has been reflected in the mortgage market, with some lenders increasing rates as swap rates—which influence fixed-rate mortgage pricing—have risen. This follows a period of decline that saw average quoted rates drop from 5.8% in July 2023 to 4.6% in February 2024.
“The recent rise in oil and energy prices has also increased the likelihood that mortgage rates will remain higher for longer. As a result, near-term expectations have softened,” Mr Parsons said.
Supply rebuilds as rental market stays tight
One significant shift across the UK has been a marked increase in the supply of homes for sale. The Rics new instructions balance jumped to +21 in February, its highest level since October 2020, leading to stock per surveyor recovering to pre-pandemic levels. This chimes with Zoopla’s finding that the stock of homes for sale was up 21% year-on-year in January.
In Scotland, Marion Currie, a Rics-registered valuer at Galbraith in Dumfries and Galloway, noted a similar pipeline. “Activity has increased as February has unfolded,” she said. “Agreed sales are starting to gain momentum and a good supply of fresh stock is in the pipeline.”
Separate data from the ESPC for East Central Scotland covering December to February showed new property listings had risen by 21.8% annually, with sales volumes up 13.4%.
Meanwhile, the UK rental market continues to experience a severe shortage of supply. Landlord instructions remained deeply negative in February, with a net balance of -17% of surveyors reporting a decline. While expectations for rent rises have moderated compared to last year, survey participants still anticipate further increases in the coming months.
