How FOMO is driving an unprecedented house price spiral in Scotland’s eighth and newest city
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Kirsty Johansson
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It is not being overly dramatic to say that there is something of a frenzy in the housing market in Dunfermline and West Fife at the moment, with both buyers and sellers more animated, agitated and active than for many, many years.
In some ways, it confounds rational analysis, since the received wisdom during the lockdown years – with all the economic damage they entailed – was that we would come back to a stinging recession.
Quite the reverse. The buzz about the market for most of this year so far has been similar to the goldrush years in the seventies oil boom in Aberdeen, or the frantic activity in 2005 to 2007 before the banking crisis and consequent financial crash.
But there is something quite different about the underlying psychology of the market at this point in the cycle – and we should never forget that housing activity is always cyclical. It never stays the same for long.
I suspect that, consciously or not, what is driving many decisions is FOMO – Fear of Missing Out. Prices have been going up at such a prodigious rate that sellers are tempted to trouser a stonking profit, while buyers are rushing to act before they go up any further.
It has been clear for some time that lockdown affected people’s thinking in many ways, and forced a deeper consideration of the way they wanted to live their lives, leading to a mini-exodus from the cities in search of calmer, more pleasant and more spacious environments.
Buyers have certainly shown a steely determination to do whatever it takes to secure the home they now want, but what has been surprising of late is how many of them have been able to find hefty chunks of extra cash to do so.
Logic suggests that many people, denied the opportunity for discretionary spend on things such as holidays and outings during lockdown, have been squirrelling money away to be ready to go over the odds for the house of their dreams.
Whatever the reason, going over the odds has now become the norm with a widespread expectation that transactions will take place at levels at least 10% over the Home Report valuation.
This, of course, only stokes inflation, as the next seller discovers the price of the last sale and starts by looking for the same – and more. And the prices continue to bubble up.
Bungalows are a case in point. They are like gold dust now since, because they need more land for less house, developers are not interested any more in building them. A recent one with lovely river views , valued at £425,000, went for £530,000, despite needing extensive refurbishment.
And the increases are across the board. The touchstone 1970s semi, which in 2019 would have gone for £160,000-£165,000, would now realise £210,000-£220,000. A modern three-bedroom detached home will be up from £230,000-£240,000 to close to £300,000.
A stone-built villa in a nice area fetching £450,000-£480,000 in 2019 will now be worth around £600,000. Even one-bedroom flats in the city centre, which have languished for years at around £65,000, are now attracting £85,000.
Housebuilders right round Dunfermline are also making up for lost time with continuing activity at Duloch to the east, Taylor Wimpey starting on 2,500 homes at at Halbeath and Kingseat to the north east, Stewart Milne planning 250 homes at Crossford in the west and Bellway busy in the north.
They, too, are selling their product at premium prices, and incentives and special offers have all but disappeared as people tire of being outbid and turn to transactions in which they know exactly how much they will have to pay.
Becoming Scotland’s eighth city in May this year as part of the Queen’s Platinum Jubilee will not do Dunfermline anything but good in terms of attractiveness and, while it has always been a dormitory for Edinburgh, more and more people are exploiting fast transport links to Glasgow.
Dunfermline also has the historical base for city status, with its association with the Kings of Scotland and the legacy of its most famous son, Andrew Carnegie who became a proud benefactor after making his fortune in the US steel industry.
Schooling needs are being enhanced by the new Carnegie College, an educational campus which combines the College with St Columba’s and Woodmill schools and which will give greater weight than normal to vocational studies.
The challenge now is to create a vibrant, active and commercially viable city centre, an uphill struggle following the loss of so many keystone retail chains during the Covid years.
Dunfermline and West Fife will remain a tempting prospect. However, as higher mortgage costs and soaring fuel bills suck available income out of the system, it is likely that house prices will become less crazy and settle down, though at substantially higher levels than three years ago.
Until then? Well, we’ll just have to hold our breath and hang on for the ride.
Alasdair Seaton is a Partner in the Dunfermline office of DM Hall Chartered Surveyors.
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