- East Renfrewshire is the mainland authority with the highest growth at 17.7%
- 2022 makes history with the largest number of high-value homes sold
- Edinburgh one of six areas with values increased by 10% or more
Scott Jack, Regional Development Director at Walker Fraser Steele, comments: “If we step back for a moment and look at 2022 overall, it has been a record year for housing transactions in Scotland – all the more significant if we consider the performance of house prices over the last couple of years which have seemingly inexorably climbed.
“When we consider the rise in prices since the start of lockdowns back in March 2020, the average house price over that period has risen £41,700 (or 22.7 per cent). If we look at consumer prices measured by the CPIH over the same period, house prices have comfortably outperformed price growth elsewhere.
“Our data looks at the entire market which includes the significant volume of cash purchases north of the border and supports the view expressed in the RICS Residential Market Survey for December and January which indicated that prices are generally remaining resilient in Scotland. A frequent observation is that there remains a lack of suitable properties coming on to the market, which creates competition for those that are available, which helps in turn support current price levels.
“If we focus specifically on December, we can see the impact of the rising cost of borrowing. The average house price in Scotland continued to rise during December, although the increase was a modest £63. Average prices have now reached £225,520, which is some £14,800 – or 7.0% – higher than a year earlier. This sets another new record average price for Scotland, the tenth to occur in 2022.”
Table 1. Average House Prices in Scotland for the period December 2021 – December 2022 (The prices are end-month smoothed over a 3 month period) (Link to source Excel)
Commentary: John Tindale, Acadia Senior Housing Analyst:
The December housing market
Average house prices in Scotland continued to rise during December, although the increase was a very modest £63. Average prices have now reached £225,520, which is some £14,800 – or 7.0% – higher than a year earlier. This sets another new record average price for Scotland, the tenth to occur in 2022.
Indeed, if we look at the change in values since the start of the pandemic in March 2020 – when the average house price in Scotland was £183,853 – there has been an increase of some £41,700 or 22.7% to the end of December 2022. This compares favourably with the increase in consumer prices of 15.4%, measured by CPIH, over the same period. Property prices have thus risen in real terms over the last nearly three years.
Looking at the first six months of the monthly rates of change in house prices in Table 1 on page 3, the total amounts to 5.3%, which contrasts with the 1.5% increase in monthly rates during the second half of 2022.
This is a clear demonstration of the cooling in the housing market that has taken place over the last six months. However, what we can also see is that, with the exception of August 2022, the movement in prices has remained positive, which indicates that demand for properties still exists – even if it has softened from the levels seen earlier in the year.
As we show on page 7, sales of high value properties have continued throughout 2022, at a pace which exceeds that of 2021 – which year had itself set new record levels, almost 90% higher than the total number of high-value properties sold in 2019.
The RICS Residential Market Survey for December and January both indicated that prices are generally remaining resilient in Scotland, which contrasts with negative movements to the south in England. A frequent comment among surveyors in Scotland is that there is a lack of properties coming on to the market, which creates competition for those that are available, generally maintaining existing price levels. We wait with considerable interest to see what 2023 has in store.
Annual change
The average house price in Scotland in December 2022 has increased by some £14,800 – or 7.0% – over the last twelve months. This annual rate of growth has marginally decreased from November’s revised 7.1%, but only by the smallest of margins. In fact, prices in December increased by just £63 in the month, but an increase is an increase, and somewhat remarkably this rise established yet another record average house price – £225,520 – for the tenth month this calendar year.
In December 2022, 29 of the 32 local authority areas in Scotland saw their average prices rise above the levels of twelve months earlier, the same number as in November. The three areas where values fell over the year were, in descending order, Aberdeen City (-5.4%), Scottish Borders (-3.0%) and Stirling (-0.7%).
Aberdeen City has now fallen by nine places over the year to 24th in terms of its ranking of average prices compared to the other 31 local authorities in Scotland. This month in Aberdeen City, flats have experienced the largest fall in value, from an average £120k in December 2021 to £105k one year later.
The area with the highest annual increase in average house prices in December 2022 was the Shetland Islands, where average values have increased by 19.5% over the year. In the Shetland Islands, detached property values have seen the highest rise over the year, from £190k in December 2021 to £240k twelve months later, but this is based on a relatively small number of transactions.
On the mainland, the highest annual increase was in East Renfrewshire, up by 17.7%. This increase has been assisted by the sale of a £2.3 million detached property in Giffnock, some nine miles to the south of Glasgow. The property is the most expensive home to have been sold in East Renfrewshire in the last five years.
On a weight-adjusted basis, which incorporates both the change in prices and the number of transactions involved, there are five local authority areas in December which accounted for 51% of the £14,800 increase in Scotland’s average house price over the year. The five areas in descending order of influence are: – Edinburgh (25%); Glasgow (11%); East Renfrewshire (5%); North Lanarkshire (5%); and South Lanarkshire (5%).
Monthly change
In December 2022, Scotland’s average house price rose in the month by just £63, or 0.0% This follows November’s rise in prices of some £1,100, but it does at least remain positive.
In December 2022, 17 of the 32 Local Authority areas in Scotland experienced rising prices in the month, which is the same number as in November. Of the 17 local authorities with price increases, 8 are in the top 16 areas when ranked by price, with 9 being in the lower half of the market. The distribution of those with price rises is therefore evenly matched between the higher- and lower-priced areas in Scotland.
The area with the largest increase in average prices on the mainland in December was Moray, up by 4.9%. This month, the increase in the average price in Moray was helped by the sale of a six-bedroom detached home, set in eight acres of land, located some 1.5 miles to the west of Elgin. It sold for £1.1 million which is the second most expensive property in Moray in 2022. It had previously been sold in June 2010 for £800k, which works out at an annual compound gain of 2.6%, over the period.
Peak Prices
Each month, in Table 2 above, the local authority areas which have reached a new record in their average house prices are highlighted in light blue. In December, there are 6 such authorities, down from the 8 in November. Scotland itself has also set a new record average house price of £225,520 in the month.
Scotland transactions of £750k or higher
Table 3. The number of transactions by month in Scotland greater than or equal to £750k, January 2015 – December 2022 (Link to source Excel)
Table 3 shows the number of transactions per month in Scotland which are equal to or greater than £750k. The threshold of £750k has been selected as it is the breakpoint at which the highest rate of LBTT becomes payable.
There were 114 such transactions recorded by Ros during the month, with 70 relating to December 2022, 34 to November 2022 and a further 10 from earlier months, increasing the number registered to date in 2022 to 1,198.
This total already exceeds that of 2021, with a further 30 or so properties likely to be added to the total next month. Thus 2022 has proven to be the year with the largest number of high value sales in Scotland’s housing history.
Indeed, on the relatively safe assumption that a further 10 sales will be added to the December 2022 total, we can say that such sales in 2022 exceeded those in each month of 2021, except for March and June.
It may be recalled that March 2021 was the last month in which the LBTT tax-holiday applied in Scotland – which explains the higher number of sales that occurred in that month. Similarly, June 2021 was the last month of the SDLT tax-holiday in England – which wouldn’t have saved money for those buying a property in Scotland, but may have acted as an incentive for those moving to Scotland from England, so as to maximise the value of the home being sold.
Table 4 (next) provides a listing of the local authority areas ranked by the number of sales in excess of or equal to £750,000 for the years from 2018 – 2022.
Transactions analysis
Figure 2 below shows the monthly transaction count for purchases during the period from January 2007 to December 2022, based on Ros (Registers of Scotland) figures for the Date of Entry (December 2022 totals are based on Ros Application dates).
The graph starts in 2007, which was something of an exception, with close to 150,000 domestic property sales in the calendar year. The 2007 sales total is the largest of the last 18 years, although the period from 2004 to 2006 came close, with an average 139,000 sales on an annual basis.
However, during 2008 the banking industry began to suffer its credit crisis, with home loans becoming difficult to obtain, especially for first time buyers. Accordingly, the number of housing transactions fell to approximately 70,000 per year over the period from 2009 to 2012.
Normality was slowly restored from 2013, with sales rising to a yearly average of 87,500 over the period from 2013 to 2015, rising to an average 102,000 sales per annum from 2016 to 2019.
The effect of the Covid pandemic – which started in March 2020 – can be clearly seen on the graph. Housing transactions in April 2020 plummeted with the arrival of the pandemic, to be followed by a slow rise in sales as confidence began to return. Then followed a period when sales exceeded previous levels, from September 2020, as lifestyle changes and the LBTT tax-holiday pushed up demand – especially for properties with space to allow for working from home.
Figure 2. The number of sales per month recorded by Ros based on entry date from 2007 – 2022 (Link to source Excel)
In Figure 2, three peaks can be seen after March 2020: in October 2020 (pent-up demand from the low transaction levels earlier in 2020) and March and June 2021 (LBTT and SDLT tax-holidays encouraging sales in both Scotland and England). In the first eleven months of 2022, transaction levels have averaged 8,563 sales per month, which closely matches the average 8,610 sales per month recorded in the first eleven months of 2019 – the last full year prior to Covid.
Heat Map
The heat map below shows the rate of house price growth for the 12 months ending December 2022. As reported above, 29 of the 32 local authority areas in Scotland have seen a rise in their average property values over the last year, the three exceptions being Aberdeen City, the Scottish Borders and Stirling. The highest increase on the mainland over the twelve months to December 2022 was in East Renfrewshire at 17.7%. 6 of the 32 local authority areas had price growth of 10.0% or higher – four fewer than in November 2022.
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