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Covid impacts property hopes

By Calum MacLeod

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Despite the pandemic, interest in the Highland property market remains high.
Despite the pandemic, interest in the Highland property market remains high.

Far from depressing interest in the Highland property market, the pandemic has been a backdrop to a boom for property sellers across the region.

However, its impact has also placed many buyers, especially businesses owners and those who have been on furlough, at a disadvantage when it comes to securing finance for their new home.

Hamish Malcolm, who is responsible for financial services at Inverness solicitors and estate agents Munro & Noble, has noted continuing interest in the Highland property market and while only 10 per cent of his financial services clients were relocating to the region from elsewhere, he believes this may not be an accurate reflection as a "race for space" fuels interest in the region from buyers new to the area.

"Anecdotally, it does seem that with people moving from down south there is probably a larger element of cash buyers," he said.

"With property prices going up and potentially being fuelled by people moving into the area, that puts a bit more pressure on local buyers.

"They need to stretch their finances to get the house they want and sometimes that's beyond their own resources."

A reflection of this is that 14 per cent of the buyers Mr Malcolm dealt with had significant financial help from family members.

There were also signs that the impact of the pandemic and other economic factors had dented some people's property aspirations.

In 2019 a quarter of Munro & Noble financial services customers came from the tourism and hospitality sector or oil and gas industry. In 2020 it was less than 10 per cent.

Similarly the number of business owners buying property, dropped from 27 per cent to just 13 per cent and the continued economic impact of Covid could keep this number low for some time to come.

"It might be into the second year of being in profit again before they can get back into the mortgage market," Mr Malcolm said.

"I appreciate a lot of business owners aren't thinking about mortgages now, but there is going to be frustration down the line as to how quickly they can jump on the mortgage ladder."

Hamish Malcolm
Hamish Malcolm

Compounding these issues, while the major lenders had become more cautious, smaller niche lenders who might have different criteria were struggling to meet demand.

Some lenders were taking up to 28 working days to approve a mortgage – which in a fast moving market like the Highlands meant potential buyers could miss out on the chance to buy a house.

However, more lenders offering up to 90 per cent mortgages were starting to come back to the market, offering potential buyers more options.

There were also positive signs with the Scottish Government's First Time Buyers Fund due to make a return in April, bringing new buyers into the market.

However, Mr Malcolm acknowledged that the last 12 months have seen a shift in the Highland mortgage market.

"If you look at our biggest sectors, such as tourism and hospitality and the hit they have taken, it is going to be more difficult for people to achieve the right numbers," he said.

"It is going to be tougher going forward for business owners than for a salaried person."

Munro & Noble group sales and marketing manager Duncan Chisholm added: "The property market is still buoyant and today alone I am putting out five sets of keys for transactions on houses. The projection is that we will match last January, which was not a lockdown month. We have also had a lot of first time buyers, which is very positive.

"Properties of interest are going very fast. They go on the market and by the end of the next week they are under offer."

Mr Chisholm was less convinced an influx of buyers from outside the region was behind the boom, however.

"There have always been cross-border transactions, but they are quite small in number and the local market is very healthy," he said.

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