Approaching a tipping point in the market

The effect of the new Borders Railway has been marked in tourism terms, and the economic uplift for local businesses is being felt throughout the area.
The effect of the new Borders Railway has been marked in tourism terms, and the economic uplift for local businesses is being felt throughout the area.

As 2015 drew to a close, it was clear that the housing market in and around the very typical towns of the Scottish Borders had been gradually approaching a tipping point – and I believe that we are on the cusp of a long seller’s market which will soon be reflected across the country.

Since the collapse of the market in the spring of 2008, buyers have had, and have employed assiduously, the whip hand. Sellers have known over the period that the only way to move house was to sell first and then look around to see what was available.

This strategy has been so different from the previous norm, in which a home buyer could purchase the house of his or her choice, confident in the knowledge that their own property would move quickly to compete the purchase/sale circle.

In these former circumstances, bridging finance was available to oil the wheels when there was a gap between buying and selling. However, this is now seen by lenders as high risk and has, as a consequence, dried up.

Over the past seven years, therefore, those wanting to move have been in the unfortunate position not only of being seen as forced sellers, but also of being rushed into purchases which might not have been their first choice.

Most of last year, we saw potential sellers make all the preparations for a move – commissioning a Home Report, engaging surveyors, making the house look spruce – but not actually putting it on the market until they spotted the ideal property that they really wanted.

Then, of course, the race was on and sellers were finding themselves with two or three interested parties in their house, and might have been considering going for a closing date when – as happened more frequently – they found that their target property was sold before they could complete.

So there has been something of a lull over the year, a phoney war as it were, in which the advantage was slowly switching from buyers to sellers, but the confidence was not yet fully in place to allow sellers to move with equanimity.

It has been a transitional period, and it is likely to continue until everyone in the process – and that includes property professionals such as solicitors, agents and surveyors – believe that it is possible to make an offer on a house before putting the seller’s house on the market.

As in the Biblical parable, we have had the seven lean years, from 2008 until now, and all the indications are that the seven fat years are just around the corner.

This region, of course, has been affected by the opening of the Borders Railway, the longest new domestic railway line to be opened in the United Kingdom for more than 100 years with three new stations at Tweedbank, Galashiels and Stow.

The effect has been marked in tourism terms, and the economic uplift for local businesses is being felt throughout the area. Many trips to the Borders may well be “inspection visits” by people considering relocation, but any consequent effect will not be felt on the property market for another six months or a year.

The railway aside, the market has performed well over the year, though there has not yet been a significant uplift in prices. Agents, however, are reporting activity well up to the end of the year, indicating the emergence of a year-round cycle rather than a market dominated by the spring and autumn peaks.

In former mill towns such as Galashiels, one-bedroom flats in the centre are still available at between £40,000 and £65,000 on average, depending on condition and location.

Former local authority homes are performing well, with three-bedroom properties in reasonable condition fetching between £100,000 and upwards of £130,000 on average. There are still bargains to be had in this sector, especially in executry sales.

There is some new build continuing, with Persimmon still active with another phase of the Gala Meadow development in Galashiels and building firm Crawfords working on the Ellwyn Terrace site in the town.

These prices are all significantly more reasonable than will be found in Scotland’s major cities and, with the new transport era in 2016, the Borders seller’s market may be at the beginning of a long and lucrative run.