The NEN – North Edinburgh News

Walker Fraser Steele’s latest House Price Index

• 11 Local Authorities in July experiencing record average prices
• Argyll and Bute has highest annual growth rate at 18.1%
• Semi-detached properties have highest price growth over the year
• Average Scottish house price now £224,035, up 0.8% on June, 9.1 annually

Table 1. Average House Prices in Scotland for the period July 2021 – July 2022

Scott Jack, Regional Development Director at Walker Fraser Steele, comments: “The average price paid for a house in Scotland in July 2022 is £224,035, establishing yet another record price for the country – the thirteenth occasion that this has happened in the last thirteen months.

This price is some £18,600 higher than that seen in July 2021, indicating that prices have risen by 9.1% on an annual basis. This annual rate has slowed from the 10.6% growth seen in June, but that month was assisted by a near £3,000 fall in prices which occurred twelve months earlier in June 2021, meaning that the base point for measuring June’s growth rate started from a particularly low level. On a monthly basis, prices in July increased by some £1,725, or 0.8%, which was close to £500 higher than the increase seen in June – continuing the bi-monthly oscillation in prices in 2022 that can be seen in Table 1 above.

Figure 1. The average house price in Scotland over the period July 2020 to July 2022

While prices continue to increase, there is some evidence that the number of housing sales in Scotland is beginning to slow – although a number of surveyors in Scotland believe this to be a regular feature of June and July’s housing market, coinciding as it does with the school holidays, when families are likely to be distracted by matters other than buying a property. It is therefore difficult to draw conclusions from the observed shortfall of sales in June, and to a lesser extent July.

Looking at Table 2 below, which illustrates the change in prices by property type, there is a far smaller difference between the property types in July 2022 than there had been in March 2022.

March 2022 shows a ‘pandemic-led’ increase in prices with detached properties having the highest growth in prices, and flats the lowest. However, in July this position has changed, with semi-detached properties seeing the largest increase in prices while detached properties are second lowest.

The change in growth rates of the different property types highlighted in Table 2 may suggest that the importance of ‘lifestyle-changes’ in the decisions involved in buying a property have shifted over the last few months, as the pandemic becomes less of an influence on peoples’ lives. Or alternatively it may just reflect a change in the mix of those who have purchased properties during the school holidays. We will have to wait and see what happens when the schools return this autumn, and families contemplate their next move.

Transactions analysis

Figure 2 below shows the monthly transaction count for purchases during the period January 2015 to July 2022, based on RoS (Registers of Scotland) figures for the Date of Entry. (July 2022 totals are based on RoS Application dates.)

It can be seen that the June 2022 total is the second lowest transaction count of the eight years shown in Figure 2, with only the June 2020 total being lower. (June 2020 was only three months after the start of the pandemic). Although the July 2022 total shows a small increase in transactions compared to June 2022, the current figure for the month remains an estimate, so at this stage not too much weight should be given to the predicted rise in sales.

RICS (Royal Institution of Chartered Surveyors), in its July 2022 Residential Market Survey, is pointing to an easing in sales market activity, with metrics on demand and sales remaining in modestly negative territory over the month. RICS add that for the time being at least – underpinned by the low levels of supply available for purchase – prices continue to rise across all parts of the UK.

Figure 2. The number of sales per month recorded by RoS based on entry date (RoS applications date for July 2022), for the period 2015 – 2022

Scotland transactions of £750k or higher

Table 3. The number of transactions by month in Scotland greater than or equal to £750k, January 2015 – July 2022

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.

Table 3 shows that there were 81 sales in excess of £750k during July 2022, and we anticipate that this number will increase as further sales for the month are processed by the Registers of Scotland. It is however doubtful that the July 2022 total will exceed the July 2021 total of 120 sales, which again suggests a slight cooling in the high-value sales market, consistent with the RICS Residential Market Survey quoted earlier. However, the total for July 2022 of 81 high-value sales still exceeds all the prior years’ July totals, except for 2021, indicating that the “lifestyle changes” associated with the pandemic – “working from home” and the “race for space” – are still features of the current housing market, even if their prominence is beginning to wane. This, as discussed on page 7, has resulted in strong competition for the properties that meet these requirements, with substantial price rises still being experienced at the top-end of the market.

A similar picture can be discerned from looking at the totals for the eight years covered by Table 3 above. It is clear that after seven months, the 2022 total already exceeds each full year from 2015 to 2018, with 2019 highly likely to be surpassed next month, and 2020 following suit shortly thereafter. It can also be seen that the sum of the first seven months of 2021 amounts to 590 sales, meaning that 2022 is not too far behind the previous year’s total at the same point in the year.

The five authorities with the largest number of the 578 high-value sales that have been recorded to date in 2022 are: Edinburgh (294); Glasgow City (37); Fife (32); East Lothian (28); and finally East Renfrewshire (20). From these figures can be seen that in 2022, Edinburgh accounts for just over half of this sector of the housing market

Local Authority Analysis

Table 4. Average House Prices in Scotland, by local authority area, comparing July 2021, June and July 2022

Table 4 above shows the average house price and percentage change (over the last month and year) by Local Authority Area for July 2021, as well as for June and July 2022, calculated on a seasonal- and mix-adjusted basis. The ranking in Table 4 is based on the local authority area’s average house price for July 2022. Local Authority areas shaded in blue experienced record average house prices in July 2022.

Annual change

The average house price in Scotland increased by some £18,600 – or 9.1% – over the last twelve months, to the end of July. This is a near £2,800 decrease over the £21,400 growth in prices seen in the twelve months to the end of June 2022 – but we were advising last month that prices in June 2021, i.e., one year earlier, had fallen by £3,000 from May 2021, so the base point for measuring annual changes in value was starting from a low level.

In July 2022, 31 of the 32 local authority areas in Scotland saw their average prices rise over the levels seen twelve months earlier – the sole exception being Inverclyde, where prices fell by -1.0. Inverclyde currently has the lowest average property value of the 32 local authority areas in Scotland, despite it having experienced a 7.4% increase in average prices in the month – discussed in more detail below.

The area with the highest annual increase in average house prices in July 2022 was Argyll and Bute, where values have risen by 18.1% over the year. This is the fourth month in succession that Argyll and Bute has recorded the highest annual change in prices, having been assisted in this process by a number of high-value sales achieving prices above their guide levels.

This occurred again in July, with the sale of a four-bedroom shipping magnate’s villa overlooking the Clyde, having an asking price of £650,000 but selling for £850,000. This is a classic example of how homes in attractive locations – this time in Helensburgh – can attract competitive bids, resulting in a significantly higher price for the property under offer.

In Table 4, it is noticeable that the top eight local authorities by value have all seen their average prices increase in the month, suggesting that the desire to move to larger properties in these areas has continued in Scotland over the summer months, despite the school holidays.

On a weight-adjusted basis, which employs both the change in prices and the number of transactions involved, there are five local authority areas in July that accounted for 44% of the £18,600 increase in Scotland’s average house price over the year. The five areas in descending order of influence are: – Edinburgh (13%), Glasgow (12%); South Lanarkshire (9%); Perth and Kinross (5%) and Highland (5%).

Monthly change

In July 2022, Scotland’s average house price in the month rose by some £1,730, or 0.8%, continuing the pattern of minor upward oscillations in property values on a monthly basis. The average price in Scotland now stands at £224,035, which sets a record level for the nation for the thirteenth month in succession.

In July 2022, 20 of the 32 Local Authority areas in Scotland experienced rising prices in the month, two more than in June. The largest increase in average prices in July, of 9.0%, was seen in Na h-Eileanan Siar, but we frequently make the point that the Islands have few sales in a month – in July there were just 12 in the Western Isles – which tends to result in large movements in average prices.

On the mainland, the highest increase in prices was in Inverclyde, up 7.4% in the month. Average prices in Inverclyde were assisted in the month by the purchase of an upmarket flat, in Greenock, being a lower conversion of a traditional 1870 Victorian blonde sandstone property, with 5 bedrooms, which sold for £370k – the second highest priced flat sold in Inverclyde in the calendar year.

At the other end of the scale the lowest increase in average prices in July, on the mainland, was Dundee City, at -3.7%. A number of new homes had been purchased in the Broughty Ferry area of Dundee earlier in the year – but the number sold diminished in July, resulting in the fall in average prices in the area.

Peak Prices

Each month, in Table 4 above, we highlight in light blue the local authority areas which have reached a new record in their average house prices. In July, there are 11 such authorities, two less than in June. We can also add that Scotland itself has set a record average price in July 2022 – the seventh of this calendar year.

Heat Map

The heat map below shows the rate of house price growth for the 12 months ending July 2022. As reported above, 31 of the 32 local authority areas in Scotland have seen a rise in their average property values over the last year, the one exception being Inverclyde. The highest increase over the twelve months to July 2022 was in Argyll and Bute at 18.1%. 16 of the 32 local authority areas had price growth in excess of 10.0% – three less than in June 2022.

Comparisons with Scotland

Figure 3. Scotland house prices, compared with England and Wales, Wales, North East and North West for the period January 2005-July 2022

Figure 4. A comparison of the annual change in house prices in Scotland, England and Wales, Wales, North East and North West for the period January 2005–July 2022

Scotland’s Eight Cities

Figure 5. Average house prices for Scotland’s eight cities from May 2021–July 2022

Figure 6. Average house prices for Scotland’s eight cities July 2022