Is the Fife Property Market Running Out of Steam? (Watch/read/listen) - Fife Properties
Fife Properties

Is the Fife Property Market Running Out of Steam? (Watch/read/listen)




In recent articles on the Fife property market, I have been talking a lot about house prices over the last 12 months and 5 years in Fife.


When it comes to newspapers talking about the property market, the headline most people look at is what is happening to house prices.


However, as 2 in 3 (65.1%) of Fife home sellers are also home buyers, the price is almost irrelevant. Let me explain.


If your property has gone down in value – the one you want to buy has also gone down in value – so you are no better or worse off (and if you are moving up market – which most people do when they move home – in a suppressed property market the gap between what yours is worth and what you will buy gets lower … meaning you will be better off).


Many property commentators (including myself) consider a better measure of the health of the property market is the transaction numbers (i.e. the number of people selling and buying).


Let’s take a look at the numbers for Fife.


The average number of properties sold in Q1 (Jan/Feb/March) between 2008 and 2020 was 407 properties per month, whilst Q1 in 2021 saw 582 properties sell on average per month (boosted by the March stats where an eye watering 724 homes sold). This meant …


42.8% more houses sold in the Fife area in Q1 2021 than the 14-year average


The average number of properties in Q2 (April/May/June) between 2008 and 2020 was 504 properties per month, whilst Q2 in 2021 saw only 593 properties sell on average per month, meaning …


17.6% more houses sold in the Fife area in Q2 2021 than the 14-year average


Finally, whilst the exact stats for Q3 2021 for our local authority won’t be published by the Land Registry for a couple of months, I can make certain calculated assumptions from the national data published by HMRC. The number of property sales for our local authority area in Q3 (July/August/September) between 2008 and 2020 was on average 551 properties per month. However, using the HMRC data, I calculate there will be 413 properties sold on average per month in Q3 2021. This means …



24.9% less houses sold in the Fife area in Q3 2021 than the 14-year average


I wanted to then look at the month-by-month statistics for our local authority for the last 12 months (up to June 2021). As you can see, there have been some interesting months in terms of housing transactions.



One of the two main drivers of activity in the housing market in the latter half of 2020 (meaning Q1 figures were better than the long-term average) was the battle for space, with many Fife buyers seeking larger properties to work from home. The second was the short-lived tax relief measures such as the cut to Land and Buildings Transaction Tax meaning property prices were at an all-time high.


But what also might surprise you is the number of people buying for the first time.


1 in 4 mortgages since lockdown have been for first-time buyers (25.12%)


Fife first-time buyers, buoyed by parental help with their deposits, the Government’s 5% deposit mortgage and ultra-low borrowing costs, have also helped to push house price growth since the start of 2021. In fact, if you split down house price growth between second time (third time etc) buyers and first-time buyers, the national annual house price inflation for first-time buyers is 9.2% compared to 8.1% for the second or third etc buyers.


The UK economy continues to deliver a benevolent framework to the British housing market.


The labour market has outstripped expectations with the millions expected to join the dole queue at the end of furlough failing to materialise and with the number of job vacancies on the rise.


Of course (and I mentioned a lot in my recent posts), the Bank of England is projected to increase interest rates to dampen inflation in the coming months, with further small rises predicted over 2022, so I do expect the demand for property to cool off as mortgage borrowing costs increase.


Normally such rises in mortgage costs would mean less property would sell, yet nothing over the last couple of years has been normal.


Many Fife property homeowners have held back putting their property on the market in the last 6 months because they were afraid, they would sell their own home but not find another to buy – thus making them homeless (nothing could be further from the truth – yet that is what a lot of people incorrectly believe).


If the Fife property market slows and interest rates rise, mortgage costs will still be very low by historical standards.


Also, if the obstacle of raising the 5% deposit can be overcome by first-time buyers plus a confidence that existing homeowners won’t be made homeless because of a cooling property market, many more people could be tempted to enter the property market by placing their property for sale first …


… thus opening up the market to more buyers – which in turn will drive up transaction numbers back to their normal 14-year average. However, raising a deposit is likely to remain the primary obstacle for many.


If you are a Fife homeowner or first-time buyer and want my thoughts on the future, then please do drop me a line.


2022 is going to be an interesting year ahead for the Fife property market – only time will tell if this will be a brief respite or is it running out of steam?


Please tell me your thoughts on what you think will happen.