✓ Increase in the rate reflects the low annual comparison point in June 2021
✓ 19 Local Authorities have price growth in excess of 10.0%
✓ Transactions are lower than in June 2021 – but that was a bumper month
✓ Argyll and Bute has highest growth rate at 25.5%
• The Walker Fraser Steele Acadata House Price Index (Scotland). Please refer to the Notes at the end for information on content and methodology.
• Walker Fraser Steele is the trading name of e.surv Chartered Surveyors in Scotland.
Scott Jack, Regional Development Director at Walker Fraser Steele, comments: “June is the mid-point in the calendar year, the summer solstice marking when the sun is at its most northerly point – but will this June also herald a change in temperature for the housing market in Scotland? Possibly.
“Average house prices continued to rise in June, but only by 0.4% (£950) to £221,900 accompanied by a slight downturn in the total number of transactions – compared admittedly to an unusually high number in June last year.
“Added to this, four of the bottom five local authorities by value saw prices fall in June, suggesting that the lower end of the market is running out of steam. However, looking in the round, whilst the number of transactions may be cooling, continued lack of supply and strong demand, particularly for higher value, spacious properties, is fuelling individual prices.
“There were 70 sales in excess of £750,000 in June alone, the highest annual increase in average house prices recorded in Argyle & Bute, up 25.5% over the year, with June seeing three high value houses go for well over the asking price. In fact, for the year to date there have been 453 sales in excess of £750,000 in Scotland, over half (228) in Edinburgh, driving the underlying rise in average house prices which have increased by 10.5% (£21,000) on an annual basis.
“As we move into the second half of the year it will be interesting to see the impact of reduced competition at the lower end of the market on properties higher up the value chain. However, to date, the sun continues to shine almost unabated as restricted supply remains the dominant factor for house prices across Scotland.”
Commentary: John Tindale, Acadata Senior Housing Analyst
The June housing market
The average price paid for a house in Scotland in June 2022 is £221,900, establishing yet another record price for the country – the twelfth occasion that this has happened in the last twelve months.
This price is some £21,000 higher than that seen in June 2021, indicating that prices have risen by 10.5% on an annual basis. This annual growth rate is the highest recorded to date in 2022, but it has been elevated by a near £3,000 fall in prices that occurred twelve months earlier in June 2021, meaning that the base point for measuring the annual growth rate started from a particularly low level.
In fact, the average house price only rose by some £950, or +0.4%, in June 2022 – the lowest monthly increase of this calendar year.
Figure 1. The average house price in Scotland over the period June 2020 to June 2022 (Link to source Excel)
As discussed, there would appear to be a minor slowdown in the number of transactions that took place in June 2022, compared to the previous year – although June 2021 had set a new record level for the month, and was also the fourth-highest monthly total of the previous ten years, so the bar to clear had been set extremely high.
On page 5 we show that the number of high-value transactions are similarly seeing a minor slowdown, but again the June 2021 total was always going to be hard to exceed. However, the June 2022 total is the second month of this calendar year in which the total number of high-value sales is not the greatest for the month of the eight years shown.
Nevertheless, the desire to live in properties with plenty of space, generally meaning the purchase of high-value detached properties, continues. Frequently, the achieved selling price then exceeds that of the guide price, likely indicating that there has been competition for properties with the requisite characteristics.
New instructions to sell remain relatively thin on the ground, so maintaining the tight supply conditions, and hence supporting the monthly increase in house prices. The latest RICS UK Residential Survey does not anticipate that this pattern will change “for the time being”.
Annual change
The average house price in Scotland increased by some £21,000 – or 10.5% – over the last twelve months, to the end of June. This is a near £4,000 increase over the £17,000 growth in prices seen in the twelve months to the end of May 2022 – but prices in June 2021 fell by £3,000 from May 2021, so the base starting point for measuring annual changes in value was already at a relatively low level, making it more likely that prices would show an increase twelve months later.
In June 2022, 30 of the 32 local authority areas in Scotland saw their average prices rise over the levels seen twelve months earlier – the two exceptions being Na h-Eileanan Siar and Inverclyde, although the average property price in Na h-Eileanan Siar only fell by £5 over the year. These two areas are currently bottom of Table 3, meaning that they have the two lowest average property values of the 32 local authority areas in Scotland. As we suggested last month, this may indicate that the competition between buyers for homes is not so intense at the lower end of the price spectrum.
The area with the highest annual increase in average house prices in June 2022 was Argyll and Bute, where values have risen by 25.5% over the year. This is the third 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 again occurred in June, with a five-bedroom detached home on the Isle of Bute having an asking price of £700,000 but selling for £830,000. Three examples, in the same area, show the way in which competition for homes in attractive locations can result in a noticeable increase in average house prices.
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 June that account for 42% of the £21,000 increase in Scotland’s average house price over the year. The five areas in descending order of influence are: – Edinburgh (13%), Glasgow (11%); South Lanarkshire (7%); Fife (6%); and Perth and Kinross (5%).
Monthly change
In June 2022, Scotland’s average house price in the month rose by some £950, or 0.4%, continuing the pattern of minor upward oscillations in property values on a monthly basis. The average price in Scotland now stands at £221,900, which sets a record level for the nation for the twelfth month in succession.
In June 2022, 18 of the 32 Local Authority areas in Scotland experienced rising prices in the month, three fewer than in May. The largest increase in average prices in June, of 7.4%, was in Perth and Kinross, where the average price of detached homes increased from £350k in May to £380k in June. The average price for homes was elevated in the month by the sale of a four-bedroom local architect designed detached property near to the Bridge of Cully, which sold for its asking price of £1.3 million.
At the other end of the scale, the lowest increase in average prices in June, of -7.4%, was in Inverclyde. In Inverclyde the price of detached homes fell from an average £360k in May to £300k in June – however, only two detached homes were actually sold in the area in June – which explains why the movement in average prices was so exaggerated. Flats are the most frequently purchased property type in Inverclyde, and these increased in price from an average £78k in May to £82k in June – a far more reasonable movement in prices over the month.
It is interesting to note that four of the bottom five local authorities by value all saw prices fall in the month, which as we commented earlier suggests that the lower-priced sector of the market is not seeing the same level of competition as is being experienced at the higher end of the market, thus allowing prices to fall.
Peak Prices
Each month, we highlight the local authority areas which have reached a new record in their average house prices. In June, there are 13 such authorities, four less than in May. We can also add that Scotland itself has set a record average price in June 2022 – the sixth of this calendar year.
Heat Map
30 of the 32 local authority areas in Scotland have seen a rise in their average property values over the last year, the two exceptions being Na h-Eileanan Siar and Inverclyde.
The highest increase over the twelve months to June 2022 was in Argyll and Bute at 25.5%. 19 of the 32 local authority areas had price growth in excess of 10.0%.
