Strong Fife market restrained by lack of supply

The residential property market in East Central Fife has, in the great majority of places, rarely been stronger and certainly demand is nudging back up towards levels not seen since before the crash in 2008.

East Central Fife, of course, is a large and diverse area ranging from the historic University town of St Andrews, and the coastal traditional fishing villages in the ‘East Neuk’, to the main provincial towns of Kirkcaldy and Glenrothes and countless surrounding villages which were largely built around industry and past mining in the area.

However, in common with many other parts of Scotland, while the market is strong, it is being held back by a persistent lack of supply.

The year started with a burst of pent-up demand in January, February and March. This had been building after a six-month slowdown in the second half of last year as people digested the implications of Brexit and other national events.

In the first quarter, homes were selling fast, often literally within days – a scenario which we have almost forgotten in recent years. We began to see sales prices regularly achieving Home Report value or indeed above, and Closing Dates re-emerged as a common occurrence.

These trends have continued, but the foot does seem to have come off the pedal slightly in recent months, with recorded new listings in Fife down 11% between Feb-April 2017. Demand remains very strong across the board for most types of property throughout the region, but there is an ever-increasing lack of available stock.

This being the case, many would-be sellers are now holding off until something suitable becomes available which is further increasing demand, particularly for certain types of good quality housing. A lack of affordable housing is also a key issue.

Accordingly, house prices are on the move. The average house price in Fife increased 3.3% in the period between March 2016/2017; rising from £123,705 to £127,774.

Admittedly, this is a fairly modest increase, but for some, the rise has been more than this amount. For example, an ex-local authority property in say, Glenrothes or Kirkcaldy, which may have previously fetched £90,000 could now quite easily attract nearer £100,000.

Of course, these trends are not wholly consistent throughout the region. The market for flats continues to struggle somewhat, particularly in the Levenmouth area where there is an abundance of such properties for sale at any given time. In Kirkcaldy, again, there is always a steady flow of flats on the market but sales are relatively steady with supply and demand broadly in balance.

Conversely, at the higher end of the flatted market, the recent refurbishment of the Station Hotel to form 19 luxury flats proved a successful venture with these selling very fast and at a level unprecedented for Kirkcaldy.

St Andrews stands apart in the area, not least when we consider the demand for flats. Of course, these trends are long-standing and are fuelled by the renowned University in the town, albeit demand has been hampered slightly through increased taxation for second homes.

Indeed, buy-to-let investors are being assailed on all sides by new UK and Scottish legislation and a new tax regime which is understandably restricting activity in all parts of the country. Investors, by their nature, are in the market for a bargain. But with the market so strong, they are in competition for properties with a resurgence of first-time buyers aiming for their initial rung on the ladder.

These issues aside, the market in East/Central Fife is currently thriving, certainly from a seller’s perspective. Longer term conditions may be largely unknown, but for the time being, we have seen the shift in power move back to the house seller rather than the buyer. All things considered, barring seismic outside events, these trends are set to continue in the short term at least.

Steven Buist is a Director at the Kirkcaldy and Cupar offices of DM Hall, one of Scotland’s leading firms of Chartered Surveyors.

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