First time buyers will struggle to get a foothold on a booming Dundee property market this year, a local expert claims.
Lindsay Darroch, head of the Dundee office of estate agent Gilson Gray, believes house prices will rise 8% this year.
He said competitive mortgage deals and demand from property investors are among the reasons for prices increasing.
But another key element is fewer properties coming onto the market.
“Demand for new homes will continue to outstrip supply this year,” he said.
“Stock levels are trending downwards by around a further 15 to 20%, just as they did in 2021.
“This will result in house prices continuing to rise at a fast pace.
“Rising prices are also being fuelled by the availability of competitive mortgage deals and continuing interest from property investors, attracted by the potential high returns on offer.
“This double whammy of lack of stock and price increases will make it increasingly harder for first time buyers to get on the ladder.”
Prices rise for first time buyers in Dundee
Mr Darroch gave the highest prediction of property price rises in 2022 among local estate agents. His estimate of 8% is well above the local average of 4.7%.
He said a recent rise in the Bank of England base rate, which increases mortgage costs, hasn’t reduced demand.
Ever increasing numbers of homes are going to closing dates and selling for well over the asking price.
A house near Broughty Ferry sold for £100,000 over its home report valuation last year.
“Even with the recent interest rates rises, property is a very attractive investment for investors,” he said.
“During 2021, the percentage paid above the asking price – or valuation – rose to record levels, sitting at approximately 10% higher than 2020. I expect this to continue during 2022.”
Meanwhile the cost of renting a property is also on the up.
“There are more properties available for rent, which you would think would suppress rental values,” he said.
“But in fact, there is strong demand there too, so rental costs have increased significantly.”
Property wish list for 2022
Mr Darroch has a property wish list for 2022 – three demands to keep the market moving.
- I would like to see property developers release more stock. That is the catalyst that will open up the housing market.
- Local authority planning teams must work more closely with developers to accelerate the approvals process. We need more housing stock urgently. As well as assisting the property market, it would also have a positive impact on the wider economy.
- More support for first time buyers to enable them to get on the housing ladder in Dundee. I’d like to see a scheme aimed at the existing homes, not new builds. This would assist a generation that is being locked out of home ownership.
