Is Scotland’s Housing Market Better Together?
25 June 2015 2653 Views
Scotland has voted to stay in the union – at least for now – and one question that investors will have on their minds is how the decision will affect the various Scottish markets. One of these markets is housing, and with a vote for Yes or No said to be a factor that could send Scotland’s housing economy into bust or boom, now that a confirmed No vote has been claimed, how is the housing market going to respond? In this article, we examine the possibilities.
Investing in Bricks and Mortar
Traditionally speaking, investing in property has always been a relatively safe bet compared with stocks and shares or FOREX markets – all of which are, to a degree, more risky investment strategies.
Although the last half-decade has been difficult for all people looking to expand their portfolios through any form of investment due to the global recession, according to a recent UK housing report, the last 18 months has seen a rapid increase in the flow of mutual funds domiciled in the UK investing into property and/or Real Estate; Investment Trusts are now at levels that have not been witnessed since 2007 and 2009.
It’s important to note that those figures are representative of the entire UK economy (excluding central London), but in general, investing in the housing market over the past 18 months – particularly the last year – has been a good decision for those that can afford to.
The No Vote
The Scottish people have decided to remain part of the UK with a margin of the vote of 55.3%, slightly higher than the opinion polls originally suggested. According to David Cameron, this means that at least for this generation of voters, the question of whether Scotland should be an independent country has been settled.
As a result, the mornings the FTSE 100 was up 0.6 to 6.858, RBS shares were up 3.5% to 366p, Lloyds shares rose 1.5% to 772p and Standard Life shares increased 1.7% to 424p. In other words, the Pound Sterling responded positively to the news.
Effects to the Scottish Property Market
The question now is whether the housing market will respond equally as positively. There are a lot of factors involved, one important one being that social housing is an extremely substantial part of the Scottish housing, catering for 23% of all households. The government needs to keep generating more housing to fulfill its social housing quota before it can expand private sector housing.
However, with that being said, those interested in investing in the Scottish housing market should breathe a sigh of relief: the pound will continue to thrive in Scotland, the market will hopefully continue its upward trend, and stability has been generated from the result.
Ultimately, you might want to wait before you put money into bricks and mortar to see what David Cameron will offer the Scotts in terms of new devolution to powers, but the No vote does look to have secured a safe financial environment in which the housing market can expand.