MortgagesSep 15 2014

‘Yes’ vote could wipe £31,000 off Scottish house prices

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A ‘yes’ vote for Scottish independence could wipe £31,000 off the average house price in Scotland, according to house price website Zoopla.

Over the last two years Scottish house prices have grown on average by 8.3 per cent (£13,728), with the average Scottish home value now standing at £177,599.

According to Lawrence Hall, head of public relations of Zoopla, a ‘yes’ vote could increase supply of available properties, while negatively impacting demand due to worker migration and result in a sharp fall in house prices.

Further uncertainties following an independence campaign victory surrounding tax, currency and interest rates are also likely to impact negatively on house prices in Scotland, he added.

Mr Hall said mortgages could become harder to obtain with a more limited choice of lenders and higher interest rates could result.

He also warned homeowners could be earning wages in a new currency, but stuck with mortgages in sterling, which would leave them exposed to currency fluctuations and potentially therefore negative equity.

Despite the gains of the past couple of years, Mr Hall added Scottish house prices still remain 2.2 per cent below their peak reached in August 2008.

Mr Hall said: “While the impact of the referendum on the Scottish and wider UK economy long-term is hard to predict and there are opposing views, a ‘yes’ vote would almost certainly have a detrimental effect on Scottish house prices in the short to medium term.

“The uncertainties on employment, tax, currency, EU membership and interest rates will all play their part and if big business does head south with a ‘yes’ vote Scotland will lose a significant piece of their service economy with nothing to replace it, leading to a greater supply and reduced demand for housing and a resultant drop in house prices.”

Mr Hall’s claims come after this morning’s report from the Centre for Policy Studies, which stated the rising cost of public sector pensions would impose “significant pressures” on a Scottish budget straitened by declining oil revenues and “the probable hemorrhaging of tax revenues from financial services.”

Calling the existing UK public pension system a “Ponzi scheme”, the report argued Scotland is particularly exposed to the problem of more pensioners in payment than active contributors, as public sector employment is 24 per cent larger north of the border (21.2 per cent of the workforce) compared to the rest of Britain (17.1 per cent).