By James Hookway 

Few places are farther from the beaten track than the wind-lashed Outer Hebrides off Scotland's northwest coast. But they are also now the prize in a tug of war over who should be able to live there.

Since the onset of the coronavirus pandemic, a surge of buyers have bought up many of the available houses, far from Covid-19 hot spots on the British mainland such as Glasgow or London. Many homes overlook sites such as Luskentyre Beach or the prehistoric standing stones at Callanish.

Local leaders say new arrivals could be a lifeline for the fragile communities that have long struggled to reverse declining populations.

But younger islanders worry the influx is pricing them out of the market -- and, ultimately, the places where they grew up and their families still live.

"Lockdown has become a double-edged sword," says Pàdruig Morrison, a 24-year-old musician and researcher from the island of South Uist who has begun campaigning for more housing opportunities for younger islanders. "People are being left with few other options but to leave at a time when it is becoming more widely accepted to stay and work online from home."

The pandemic has upended the property market in many countries. In the U.S., home sales rose to a 14-month high in October as families left large, crowded cities in search of more space in places such as the Hudson Valley, where earlier this year house prices were rising faster in the town of Kingston than in New York City or San Francisco.

Mortgage approvals in the U.K. hit a 13-year high in September. Real-estate agencies say there has been a surge of interest in buying properties outside London with gardens and more space for home offices.

But in Scotland's Western Isles, where the number of cash sales is up 50% from last year -- a sign of mainlanders swooping in to buy up second homes -- residents worry an influx of new money will radically alter the makeup of the area and jeopardize its unique Gaelic-speaking culture and ancient traditions.

"The free market doesn't always lead to good outcomes," says Martin Baillie, an architect and Gaelic activist who lives and works on the Isle of Skye. "Sometimes we need government to step in and take action."

Some property listings, such as a two-bedroom cottage overlooking Luskentyre Beach in Harris priced at 385,000 pounds, equivalent to $510,000, are being offered at a third or more than what similar properties were sold for before the pandemic began. The sums are far in excess of what many local people can afford. In some areas, more than half the properties are now second homes.

Steven Dòmhnallach and his girlfriend recently decided to leave their home in Glasgow, Scotland's largest city, and return to North Uist, where he grew up. He already had a job lined up in the salmon-farming industry and it seemed to be a good time to go. "We're homebirds, really. I just wanted to get back to nature and the lockdown played a part in that," he says.

Finding somewhere to live is proving more difficult. His family and friends have been looking on his behalf and he posted inquiries to local Facebook pages. For now, Mr. Dòmhnallach, 27, has a long-term let on a holiday chalet owned by a family friend.

"Buying or renting is really difficult. The houses that do turn up on the market are whipped straight away by people from further south with more money," he says. "There is one near us. The people who own it are really nice, but it is empty maybe 90% of the year."

Mr. Morrison, an accomplished accordionist, is helping to organize a grass-roots group pushing for new measures to provide islanders with a stronger foothold on the property ladder, such as advertising new homes locally before on the mainland. He points to how political groups in Wales are now proposing to cap the number of second homes there.

Other countries have also taken steps to cool overheating property markets, even before the pandemic.

New Zealand banned overseas sales of existing homes in 2018 to arrest what was then one of the world's fastest-growing property markets. In Canada, Vancouver and Toronto introduced new taxes of up to 20% on overseas sales to cool their property markets and provide locals with a toehold after a wave of Chinese investment.

Islands in the English Channel, including Jersey and Guernsey, have long reserved some housing for people who were born there, while London's mayor, Sadiq Khan, has promoted a scheme to limit sales of all new-build homes in the capital valued at up to GBP350,000 to Londoners for the first month they are available.

The Scottish government says it recognizes the problem. Kevin Stewart, the housing minister, says advertising properties locally could have a positive effect, but would have to be voluntary. "The way in which an owner chooses to market their property is a matter entirely for them," he says.

Instead, the government has allocated GBP50 million to build low-cost homes in Scotland's rural and island communities and is giving local councils more leeway to set higher taxes on second homes.

The rising demand is a boon to some islanders, however. Isabel Macleod, director at the Hebridean Estate Agency in the islands' largest town, Stornoway, says many had been waiting years to sell their properties before the pandemic struck. "It's either a buyer's market or a seller's market, and the shoe was on the other foot for a long time," she says. "But if things don't settle down, the government may have to step in and do more to help first-time buyers."

Alasdair Allan, the islands' representative in the Scottish Parliament, says a delicate balance needs to be struck.

"Nobody is saying we don't want new people to come here -- we want new people," he says. "But if you don't get a variety of people living here, then there won't be a school and then younger people can't stay. The extreme situation is that you could get to the stage of not having any working-age population at all. You can't trust the market on this. You have to get this right."

The clock is running, though.

"If people can't afford to stay in the place where they grew up, then their culture leaves with them," says Mr. Baillie, the architect. "It's not like gentrification. We can't just move to the next town along; we'd end up in the sea."

Mr. Dòmhnallach worries that if no measures are taken, then the Hebrides could share the fate of St. Kilda, a small outcrop of islands 40 miles west of North Uist that was largely abandoned in 1930 after many of its people left for the mainland.

"If nothing is done, I really think that in 50, 60 years from now, the same could happen again," he said.

Write to James Hookway at james.hookway@wsj.com

(END) Dow Jones Newswires

November 21, 2020 10:14 ET (15:14 GMT)