Every sector of our economy is currently being hit by the cost-of-living crisis, from multi-million-pound hospitality businesses to small sole traders on Scotland’s high streets.
But one sector which is worth watching is the property industry which continues to boom despite several predictions that there would be an eventual fall in UK housing this year.
Despite various challenges for both homebuilders and buyers, there is still a huge rate of demand for new homes, especially in Scotland.
This demand continues to drive the cost of homes with properties achieving (and in most cases still exceeding) its home report value.
Last month, average home prices in Scotland increased yet again reaching an average of £181,415 according to the UK House Price Index 2022.
This is a concern for first-time buyers looking to get on the property ladder, as well as for those desperate to move to a bigger property as they’ve outgrown their current home. After all, with higher prices come higher deposits.
Homebuilders, on the other hand, will be profiting from this boom as they can align their prices with the market.
For some prospective buyers, a new-build might be the best option as it means they can avoid bidding wars and avoid paying more than the home report value for their property.
But one of the issues with the rise in demand is the supply problem. There are reportedly fewer properties on the market, therefore sales volumes and property listings are returning to pre-pandemic levels.
Many looking for homes are also desperately trying to find their new abode so they can secure fixed mortgage rates before the interest changes – another prediction for the coming months. Whether this happens or not, only time will tell.
What’s fascinating is the drive for demand and what’s caused this. Interestingly it seems like we’re still seeing the effects of the pandemic (and I’m sure we’ll continue to for a long time to come) and, in particular, our lifestyle and location choices.
We’re looking for larger homes, more outdoor space and – since many are still working from home, or at least hybrid – we need space to work too.
In a post-pandemic world, it’s also become evident that people are still keen to move out of the city and urban areas and instead settle down in an idyllic rural or coastal setting.
Despite growing sales and profits there are still challenges to navigate for homebuilders and the construction industry.
Take labour and materials costs, for example. Housebuilder Persimmon is reportedly anticipating a 10 per cent drop in completions and said shortages of workers has forced up pay, while the price of materials like timber and steel have gone up due to the war in Ukraine.
However it did report that customer enquiry levels were “healthy” and cancellation rates were low.
Also healthy was Scottish housebuilder Cala Group’s six-month trading update which was released last week. Despite the continuing supply chain challenges, it was a positive report overall.
The housebuilder announced its completions were up three per cent and turnover was up 15 per cent to £688m compared with the same period last year.
It has sold 90 per cent of its homes for the 2022 financial year and the company says it’s on course to deliver uplift in units, turnover and pre-tax profit for the full year. It’s a great position to be in and highlights the strength of market demand.
There are still experts who believe the market will crash at some point but with many housebuilders reporting strong forward sales, it’s hard to imagine that happening any time soon.
Only time will tell if the cost of living increases will eventually have an impact on ability to buy.
Office Market Rebounds as Hybrid Working Sets New Norm
As a commercial property landlord I was pleasantly surprised to hear the office market outlook has been remaining positive across the central belt of Scotland, despite the country seeing one of the biggest rises in people working from home.
New data from property consultancy company JLL has shown clear trends toward occupiers reviewing property strategies once again after lockdown, with demand for office space seeing a particular uptake in Glasgow and Edinburgh.
The subject of returning to the office has been topical for quite some time now, with many debates about whether people work as hard at home as they do in the office.
It’s a scenario that many business leaders have been deliberated over when examining the long-term impact of working from home.
Personally I think there are benefits of hybrid working for both business leaders and employees.
The businesses that are on to a winner are the ones that are giving their employees the best of both worlds, allowing flexibility while providing an inviting office environment that staff genuinely enjoy spending time in.
The latest data supports that, showing it’s the best buildings that have attracted the strongest interest.
A lot of my contacts admit that a return to the workplace, even if on a hybrid basis, helped restore a sense of normality and the chance to speak to colleagues without the barrier of a screen brought welcome relief.
It’s great to see office supplier turnover being on the up.
As a consequence, we might have to put up with the occasional classic office arguments, like ‘who stole my lunch?’ – but by and large the benefits are clear to see.
It Made Me Laugh
I was very amused to the outrage that erupted after a chef transformed a McDonald’s meal into a gourmet pasta dish.
Personally I can’t help but admire the creativity of chef Amy Braindwein who managed to create a swanky dish out of a Happy Meal.
The content creator was challenged with turning junk food items including fries, chicken nuggets, sweet and sour sauce and two apple pieces into a gourmet meal and the outcome created quite the storm.
Scots in particular seemed to be especially outraged when the creation was unveiled on TikTok – mainly because of the portion size left over once it was blended together.
Maybe they’re right – although it looks tasty, I can’t quite imagine this tiny treat forming quest at the drive-through window. As the old saying goes, if it ain’t broke, don’t fix it.
It Made Me Weep
I’m disgusted that, amid the cost of living crisis, scammers have been weaponising their usual tactics of preying on the vulnerable with ‘get rich quick’ schemes and even fake offers and job advertisements.
I fear what comes next after popular Indian restaurant Dishoom in Edinburgh issued an urgent scam warning to customers. Fraudsters pretended to be its customer service team and asked former diners for personal details.
At such a difficult time, it both infuriates and baffles me that people will go to such extreme lengths to generate income.
Scammers seem to stop at nothing to line their own pickets and it’s sickening. What kind of ‘business’ scam will be next on the agenda? It really doesn’t bear thinking about.
Be on your guard folks!
