Scottish prices set to fall in short term

Residential property prices in Scotland look set to fall in the coming months amid an economic slowdown, but the longer term picture looks bright, according to a new report.

PwC has downgraded its growth forecasts for Scotland’s economy following the UK’s decision to leave the EU, but despite ‘skirting very close to recession’, it believes that the country will just avert a recession.

PwC had forecast 1.8% growth in their March report, which has now been revised down to 1.3% post Brexit as it anticipates a slowdown in business investment from abroad, and although the rate of growth is set to decline further, it is not expected to drop below 0.3%, before gradually recovering at some point next year, which should help to fuel house price growth.

Despite the anticipated dip in house values in the near term, which PwC think will buck the UK trend, the accountancy firm’s UK Economic Outlook report suggests that home prices will increase significantly after two years and reach an average of £156,000 by 2020.

Lindsay Gardiner, regional chairman at PwC in Scotland, said: “Given what we are seeing here and in the recent Fraser of Allander report, Scotland is skirting very close to recession and while it is going to be a challenging few months, the country should avoid it.

“As the UK now has a new cabinet and PM, who has stated she will proceed with Brexit, there is less uncertainty now than there has been for a few weeks and that is a good thing but there is still much uncertainty ahead as we now enter the areas of working out the best deal for the UK with Europe and what potential spin-offs that may mean for Scotland.

“While our modelling sees the UK avoid recession, it would be prudent of businesses to make plans for recession scenarios, where they can.”