As 2017 drew to a close, the housing market in Dunfermline and the surrounding areas is still weighted in favour of sellers, with prices back to, and sometimes exceeding, pre-recession levels.
However, as is the case in many provincial towns across Scotland, changes in the market affect different sectors in different ways. What we are seeing in Dunfermline is something of a Goldilocks scenario: that is, the properties in the middle are just right – at the moment.
Let’s look at the outer ends of the market first. There has been no excitement whatsoever in the sub-£100,000 sector, largely flats, for a variety of very understandable reasons.
Buy-to-let investors, who traditionally are the most active in this arena, have been taking flak across a number of fronts. There is the 3% added charge on second homes; tax relief on interest paid has been lost; and all private rental accommodation must now be substantially upgraded.
Add to this the fact that a landlord’s automatic right to recover possession under a Short Assured Tenancy by giving two months’ notice has been removed, with the aim of giving private tenants similar rights to those in social housing.
This effectively transfers control of the length of the lease to the tenant, which is not an issue for landlords in the case of good tenants but can cause interminable problems with those who are not so amenable.
A tribunal is being established to intervene in – and rule on – disputes and some landlords are taking the view that the game is no longer worth the candle and are exiting the market. However, buy to let as an investment will continue to produce returns, so landlords should take stock and see how the market settles down.
The upper end of the market – in Dunfermline that probably means homes priced in excess of £450,000 – has its own challenges, with Land and Buildings Transaction Tax continuing to have a major impact on sales.
Purchasers of a £500,000 property have to find an extra £23,350 to meet the tax bill; a £750,000 home would attract a charge of £48,350; and a £1million house, rare as they are in Scotland, would be hit for £78,350. It’s enough to give even top end buyers pause for thought.
However, in the middle of the market, it’s a very different story indeed. Buyers in the £325,000 range and below benefit significantly from the current LBTT regime and house builders have had a good year in areas such as Duloch, still aided by Help to Buy schemes.
Even existing estates are doing well. Pitcorthie, a 1970s Wimpey estate, is something of a barometer for the Dunfermline area. A three-bedroom semi-detached home there plunged from £150,000 to £155,000 pre-recession to around £110,000 to £115,000 in 2009/10. It would now be back to 2007 levels.
The Bridge Effect – Edinburgh commuters seeing the North Shore of the Forth as a viable prospect following the completion of the new crossing – is ever more evident. More modern homes have not just hit pre-crash levels but are sprinting past them.
There was something of a hiccup when the existing road bridge was closed for weeks last winter, but the added security of the new crossing – which will be up to motorway standard – has eased many concerns.
And of course there has been the recent small increase in interest rates. Will this have a negative impact on the market? Probably not, but the market will almost certainly factor it in as indication of the direction of travel.
Focus on new build is shifting inexorably from the Eastern Development around Duloch towards the north of the town around the Wellwood district, an attractive area with schools, a golf club and a country park close by. Persimmon Homes have started to build on land there previously owned by I & H Brown.
Developers are looking east and west too. Taylor Wimpey is looking at proposals towards Halbeath; Stewart Milne is considering 200 homes at Crossford; and Avant is building high end homes at Cairneyhill.
All these changes will inevitably put pressures on provision for school places and other services, but they are also very strong signals that the Dunfermline property market is, in general, hale and hearty.
Alasdair Seaton is partner in the Dunfermline office of DM Hall Chartered Surveyors.