Tag: property

Scotland’s house prices show varying regional fortunes

Scotland’s house prices show varying regional fortunes

  • Midlothian has highest mainland annual growth rate in January at 9.9%
  • City of Edinburgh the largest weighted fall in prices annually
  • Rising prices in 16 local authorities over year, as in December
  • 2023 total transactions lowest since 2013
  • Average Scottish House Price now £221,693, unchanged on December, 0,2% up annually

Scott Jack, Regional Development Director at Walker Fraser Steele, comments: “This month saw negligible movement in the monthly house price, with January’s transaction figures telling a story of a market whose home movers are doing so out of necessity rather than discretion.

“This may change as rates settle but for now the impact of prices is clear. The January average house price figure stands at £221,693, which only differs by -£19 from the revised figure for December.

“However, as we have noted before, it is only when we look under the bonnet of the national headline that we can see there has been considerable variation at a local level. Our analysis shows that 16 local authority enjoyed price rises in the month and 16 with price falls, ranging from +9.7% in Inverclyde to -4.2% in Moray.

“From January 2023 to January 2024, Midlothian, Aberdeen City, East Renfrewshire and Stirling account for 50% of the gains which have been made over the year, and all have all seen a reasonably large increase in the average price of detached homes.

“On an annual basis there is a slightly larger movement in values, with prices in January 2024 having increased by £520, or +0.2%, compared to a fall in December 2023 of -£670, or -0.3%, over the year. This positive movement may herald a slightly broader improvement as lower mortgage rates, alongside expectations of Bank of England interest rate cuts in the second half of the year, should help buyer confidence in the short term.”

Commentary: John Tindale, Acadata Senior Housing Analyst

January’s housing market

Once again Scotland’s average house price has barely changed in the current month, with January’s average figure at £221,693, which only differs by -£19 from the revised figure for December.  However, as in several recent months, the national average of “zero change” masks considerable variation in prices at the more local level. For example, in January, there are 16 local authority areas with price rises in the month and 16 with price falls, ranging from +9.7% in Inverclyde to -4.2% in Moray.

On an annual basis there is a slightly larger movement in values, with prices in January 2024 having increased by £520, or +0.2%, compared to a fall in December 2023 of -£670, or -0.3%, over the year. Again, on an annual basis, there are 16 local authority areas with price rises and 16 with price falls, the same number as seen in December. The movements in average prices at local authority level for the month and year are shown in Table 2 on the next page.

Looking at the weighted movement in prices, from January 2023 to January 2024, there are four local authority areas that account for 50% of the gains which have been made over the year, namely (with the percentage of the 50% gain in brackets): – Midlothian (+16%), Aberdeen City (+13%), East Renfrewshire (+12%) and Stirling (+9%). The one common feature of the four areas is that they have all seen a reasonably large increase in the average price of detached homes.

Interestingly, over the same twelve-month time period, the City of Edinburgh has had the largest fall in prices, accounting for -18% of the reduction in average values in Scotland on a weight adjusted basis.

The majority of this fall in Edinburgh arises from the drop in average values of terraced properties and to a lesser extent semi-detached homes, while the average price of detached homes and flats has continued to rise.

Terraces in Edinburgh do of course include some magnificent examples of grand Georgian architecture, as evidenced by the highest-priced property sale of the month (as described on page 6), with the average price of terraces in Edinburgh being £360k, double that of the average for Scotland at £180k.

Figure 1.Scotland’s average house price for the period from January 2022 to January 2024

Figure 1 shows how average house prices in Scotland have changed over the two years from January 2022. It can be seen that there was a slight dip in prices over the period from December 2022 to March 2023, which may be about to repeat itself, albeit to a lesser extent, some twelve months later. However, aside from this small dip, average prices have been relatively stable over the seventeen months from July 2022 to November 2023.

Local Authority Analysis

Table 2. Average House Prices in Scotland, by local authority area, comparing December 2022, November 2023 and December 2023

Table 2 above shows average house prices, calculated on a seasonal- and mix-adjusted basis, by Local Authority Area, for January and December 2023 and January 2024, together with the corresponding percentage price changes over the last month and year. The ranking figures are based on average house prices in January 2023 and 2024. Line items are shaded in blue in cases where average house prices in the Local Authority Area have experienced record highs in January 2024.

Annual change

The average house price in Scotland in January 2024 has increased by £520, or 0.2%, over the last twelve months, which is 0.5% higher than the revised rate of -0.3% in December 2023, one month earlier. The revised December 2023 figure of -0.3% is the first time the annual growth rate has been negative since May 2016, some seven and a half years earlier.

In January 2024, 16 of the 32 local authorities in Scotland were reporting a positive movement in prices over the previous twelve months, the same number as in December 2023.

Midlothian had the highest annual rate of price growth in January of all local authority areas on the mainland, at 9.9%, having been in second position in December. In Midlothian, all property types have seen an increase in values over the last twelve months, with detached homes and terraces having the largest influence on prices, with two new-build detached homes selling in Roslin, some seven miles south of Edinburgh, for £715k apiece.

Staying on the mainland, Stirling has the second-highest annual growth rate at 7.4%. All property types – except semi-detached – have experienced average price increases in Stirling, but this month it is flats that have seen the most significant rise, up from an average £145k in January 2023 to £185k one year later, assisted by the sale of a three-bed penthouse apartment in the Bridge of Allan, for £410k.

At the other end of the scale, the area on the mainland with the largest percentage fall in prices over the last twelve months was West Dunbartonshire, at -8.5%. In West Dunbartonshire, all property types saw prices fall over the year, with the largest fall this month being flats, down from an average £100k in January 2023 to £95k one year later. This means that West Dunbartonshire now has the seventh-lowest average price for flats in Scotland’s 32 local authority areas.  

Monthly change

In January 2024, Scotland’s average house price fell by just -£19, or 0.0%, which contrasts with the revised -£1,250, or -0.6%, change in prices in December 2023. Scotland’s average house price now stands at £221,693, a level first reached in July 2022.

In January 2024, 16 of the 32 Local Authority areas in Scotland experienced rising prices in the month, the same number as seen in December 2023. The area with the highest increase in its average price in the month was Inverclyde, up by 9.7%. All property types saw an increase in their average prices in Inverclyde, with the largest rise being in detached properties, assisted by the sale of a recently renovated five-bedroom detached home, located in Kilmacolm, some 15 miles to the west of Glasgow, for £1.4 million.

In second place, with a monthly increase of 5.6% is East Ayrshire. All property types, except for terraces, saw an increase in prices in the month, with semi-detached homes rising from an average £143k in December 2023 to £160k in January 2024. The increase in average prices in the month was assisted by the sale of a £767k detached property in Dunlop, some seven miles north of Kilmarnock.

By way of contrast, the area on the mainland with the largest monthly fall in its average price was Moray, down by -4.2% in the month. All property prices saw a fall in Moray in January, with the largest being in terraced homes, down from an average £156k in December to £148k in January – although January tends to be a quiet market, with only 13 terraced sales having been recorded to date in the month.

For interest, the highest-priced residential property to have been sold in Scotland in January 2024 was a four/five-bedroom Georgian terraced home in Great King Street, New Town, Edinburgh, which forms part of the UNESCO World Heritage site – it fetched £2.25 million.

Transactions analysis 

Figure 2 below shows the monthly transaction count for purchases during the period from January 2019 to January 2024, based on Registers of Scotland (RoS) figures for the Date of Entry (except for January 2024, which is based on RoS Application Dates).

The first year on the chart, 2019 (light blue line), was relatively “normal” having an average 8,560 sales per month, some 2.1% higher than the total for 2018, but -0.3% lower than 2017.

As can be seen, 2020 (the turquoise line) was more varied, the Covid pandemic having manifested itself in March 2020, with the first lockdown taking place in April 2020, when the market slumped to just 2,637 sales. There was then a slow path to recovery during the remainder of 2020, with a peak in transactions in October 2020 of 13,045 sales, as the benefit of the LBTT tax holiday and the mantras of the “race for space” and “work from home” came to the fore.

There was a second peak in transactions in March 2021 (the brown line), as purchasers scrambled to take advantage of the tax holiday, before its cessation on April 1st 2021. In 2022 (the red line), house purchases returned to near normality, with the first nine months of 2022 seeing an average 8,600 sales per month. However, Liz Truss came into power on 6 September 2022, with her mini-budget, which resulted in the bank base rate being raised to 2.25%. The bank rate was further increased on 3rd November and 15th December 2022, ending the year at 3.5%.

Figure 2.The number of sales per month recorded by RoS based on entry date from 2019 – 2024

This brings us to 2023 (the yellow line) – the relatively high bank rate of 3.5% had an adverse effect on property transactions, with only 5,915 sales for January 2023 – the lowest January total since 2013. Although the housing market in 2023 did enjoy the spring bounce in transactions that occurs traditionally in March, the bank base rate was increased a further five times in 2023, reaching 5.25% on 3rd August 2023 (the current rate). Over the twelve months of 2023, sales have amounted to some 91,200 properties, which is 12.0% down on 2022 and is the lowest annual total since 2013.  

Sales for January 2024 are still being processed, but early indications are that total sales will be even lower than January 2023.

Scotland transactions of £750k or higher

Table 3. The number of transactions by month in Scotland greater than or equal to £750k, January 2015 – January 2024

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 59 such transactions recorded by RoS during January 2024. Currently, this is the fourth-highest January total recorded to date, but with RoS processing further data for the month, it may possibly rise to third place in the yearly rankings – this will become evident next month. Following the pandemic, July 2022 had the highest monthly total of 137 sales over £750k, when transaction counts were still “catching-up” with the lost months of the pandemic years.

Looking at the total number of high-value properties sold in each year in Table 3, 2022 is ranked first with 1,231 high-value sales, 2021 is in second place with 1,102 sales, while 2023, with 1,071 sales, is ranked third.

However, there is a clear trend, in that the totals in each month of 2023 are lower than, or equal to a year earlier. In aggregate, the high-value 2023 transactions are currently down on the 2022 total by 13%, compared to a 12% downturn in sales volumes in the market as a whole, indicating that last year’s enthusiasm for the purchase of high-value homes has marginally decreased from a year earlier.

Edinburgh accounts for 474 of the 1,071 high-value sales (44%) that have been recorded by RoS in 2023, compared to 48% in 2022. In 2023, East Lothian finished in second place with 73 such sales, closely followed by Glasgow in third place with 69 sales. Glasgow is currently 9 sales ahead of fourth-placed East Renfrewshire, with 60 high-value sales, and finally we have two authorities in equal fifth position, being East Dunbartonshire and Fife, with 55 sales each.

Sales for January 2024 are still being processed by RoS, with 59 high value sales having been recorded to date, of which 25 relate to Edinburgh (42%).

Peak Prices

In Table 2 above, those areas which have reached a new record in their average house prices are highlighted in light blue. In January 2024, there was 1 such authority being Inverclyde, the same number (although not the same authority) as in December 2023. The movement of prices in Inverclyde in January 2024 has been discussed in the “Monthly Change” section on page 5 above.

Heat Map

The heat map below shows the rate of house price growth for the 12 months ending January 2024. As reported above, 16 of the 32 Local Authority Areas in Scotland have seen a rise in their average property values over the last year. The highest rise over the year was in Na h-Eileanan Siar, at 11.2% growth, with the largest fall in the year in the Orkney Islands at -14.0%.

How Scotland Compares

Figure 3. Scotland house prices, compared with England and Wales, North East and North West for the period January 2005-January 2024 Figure 3. Scotland house prices, compared with England and Wales, North East and North West for the period January 2005-January 2024

Figure 4. A comparison of the annual change in house prices in Scotland, England and Wales, North East and North West for the period January 2020–January 2024

Scotland’s Eight Cities

Figure 5. Average house prices for Scotland’s eight cities from November 2022–January 2024

Figure 6. Average house prices for Scotland’s eight cities January 2024

 

Scotland’s house prices unchanged over last twelve months

Walker Fraser Steele November House Price Index

No change in Scotland’s house price over last twelve months

·      East Renfrewshire prices rise by 12.0%

·      Dumfries and Galloway prices fall by -5.4%

·      Transactions down by 12.3% on 2022 levels

Scott Jack, Regional Development Director at Walker Fraser Steele, comments: “At a national level, the picture this month shows Scotland’s average house price in November 2023 barely changed over the last year. However, it also reveals some significant regional differences in average house prices over the same period.

“This is remarkable when you consider the affordability pressures experienced by the housing market since the autumn of ’22. The average house price now is just -£16 lower than twelve months earlier and stands at £222,637.

“The reality is that regional hotspots like East Renfrewshire which enjoyed price gains of 12% during the period have been offset by dips elsewhere, such as Dumfries and Galloway which has endured a fall of -5.4%.

“We have also seen variance in property types. Over the last year, the average price of detached properties has increased by +1.2%, and flats by +0.5%, while semi-detached and terraced properties have fallen by -1.8% and -0.9% respectively.

“With underlying trends such as mortgage affordability improving now, more buyers will re-enter the market providing competition for the cash purchasers, who currently represent 36% of all sales in Scotland, which will further boost confidence.”

House PriceIndexMonthly Change %Annual Change %
£222,637291.6-0.30.0

Table 1.  Average House Prices in Scotland for the period November 2022 – November 2023

(The prices are end-month smoothed over a 3 month period)

MonthYearHouse PriceIndexMonthly Change %Annual Change %
November2022£222,653291.60.16.7
December2022£222,399291.3-0.16.5
January2023£221,162289.7-0.64.5
February2023£219,827287.9-0.62.9
March2023£219,531287.5-0.11.3
April2023£221,173289.70.71.5
May2023£223,391292.61.01.6
June2023£223,831293.20.21.4
July2023£223,308292.5-0.20.5
August2023£223,079292.2-0.10.4
September2023£223,803293.10.30.7
October2023£223,403292.6-0.20.5
November2023£222,637291.6-0.30.0

Note: The Walker Fraser Steele Acadata House Price Index (Scotland) provides the “average of all prices paid for houses”, including those made with cash.

Commentary: John Tindale, Acadata Senior Housing Analyst

November’s housing market

Scotland’s average house price in November 2023 has barely changed over the last year, being just £16 lower than twelve months earlier, and now stands at £222,637. Looking at Table 1 above, it can be seen that for eight of the last twelve months, the average house price has been in a range between £222,400 and £223,830, with the peak occurring in June 2023.

However, referring to Table 2 (on page 4 of this report), there is only one local authority area where the annual rate of change in house prices is zero, which is Glasgow City.

All 31 other areas in Scotland will therefore have been seeing some movement in their average house prices over the previous twelve months. Excluding annual price changes in the range of ±1% only removes a further 4 authorities, leaving 27 authorities that have annual price movements in excess of ±1%.

Indeed, an annual rate of ±3.6% would need to be reached before excluding half of the 32 areas in Scotland. It would therefore be wrong to conclude that all of Scotland’s local housing markets have been static over the last twelve months – rather, the more correct conclusion is that “it just so happens” that when you add all the movements in house prices in Scotland together, they sum to minus £16.

A similar picture emerges when looking at property types – over the last year, the average price of detached properties has increased by +1.2%, and flats by +0.5%, while semi-detached and terraced properties have fallen by -1.8% and -0.9% respectively.

Again, the sum of these changes will amount to (minus) £16 – but that is by chance. There are however underlying trends, such as the level of interest rates (discussed later) and the increase in household living costs which will affect all properties, but even then, these factors don’t necessarily apply to all.

Cash purchasers, for example – who currently represent 36% of all sales in Scotland – may be less influenced by high interest rates, compared to having to take out a loan to purchase a property. 


Figure 1.Scotland’s average house price for the period from March 2020 to November 2023

Figure 1 shows how average house prices in Scotland have changed since the start of the Covid pandemic in March 2020.

It can be seen that the average price has barely moved over the twelve months from November 2022 to November 2023, although values have risen by £39,640 from March 2020. This increase of 21.7% over the period compares to a figure of 19.7% in the CPIH Index – so in real terms (after allowing for consumer price inflation) the average house price in Scotland since the start of the pandemic has risen by 2.0%.

Local Authority Analysis

Table 2. Average House Prices in Scotland, by local authority area, comparing November 2022, October 2023 and November 2023

Table 2 shows average house prices, calculated on a seasonal- and mix-adjusted basis, by Local Authority Area, for November 2022 and October and November 2023, together with the corresponding percentage price changes over the last month and year.

The ranking figures are based on average house prices in November 2022 and 2023. Line items are shaded in blue in cases where average house prices in the Local Authority Area have experienced record highs in November 2023.

Annual change

The average house price in Scotland in November 2023 has fallen by a minimal £16, or 0.0%, over the last twelve months, which is 0.5% lower than the rate seen in October, one month earlier. This is the lowest annual growth rate since May 2016, some seven and a half years earlier.  

14 of the 32 local authorities in Scotland were reporting a positive movement in prices over the previous twelve months, compared with 17 in October. However, as with the previous month, Edinburgh had the largest fall in prices over the year when measured on a weight-adjusted basis (which takes into account both the number of sales and the nominal fall in its average price of -£7,660), which on its own counterbalanced some 27% of the positive movement in values in the 14 areas with price gains.   

In November, on the mainland, East Renfrewshire had the highest increase in its annual rate of price growth, at 12.0%, which enabled the authority to remain in top position in Table 2 for the third month running.

In fact, East Renfrewshire has occupied first place in Table 2 – indicating it has had the highest average property values – for six of the last twelve months, trumping the City of Edinburgh which has only been in first place for four months over this period. In East Renfrewshire, all property types have seen an increase in values over the last twelve months, but particularly semi-detached homes, with average prices rising from £300k in November 2022 to £350k twelve months later.

Staying on the mainland, Midlothian has the second-highest annual growth rate at 10.7%. Again, similar to East Renfrewshire, all property types have seen an increase in their average prices, but in Midlothian it is terraced properties that have had the most significant increase, up from an average £205k in November 2022 to £235k one year later.  

At the other end of the scale, the area on the mainland with the largest percentage fall in prices over the last twelve months was Dumfries and Galloway, at -5.4%. In Dumfries and Galloway, all property types saw prices fall over the year, with the largest fall on a weight-adjusted basis being terraced homes, down from an average £140k in November 2022 to £125k one year later.

Monthly change

In November 2023, Scotland’s average house price fell by some -£750, or -0.3%, which contrasts with the revised -£400, or -0.2%, change in prices seen in October. This is the seventh monthly fall of 2023: however, as discussed above, it would appear that prices have been gently oscillating over the last eight months, with the average price ranging between £221,000 and £224,000.     

In November 2023, 12 of the 32 Local Authority areas in Scotland experienced rising prices in the month, the same number as in October. The area with the highest increase in its average price in the month was Inverclyde, up by 6.0%, although it still remains the authority with the lowest-priced housing in Scotland. The increase in the area’s price in the month was assisted by the sale of a modern 2-bedroom apartment, in Cloch Road, Gourock, overlooking the Clyde estuary, for £350k.

By way of contrast, the area on the mainland with the largest monthly fall in its average price was Fife, down by -3.6%. All property types in Fife saw a fall in their average prices over the month, with the most significant fall in prices being semi-detached homes, down from £207k in October 2023 to £192k in November.

For interest, the highest-priced home to have been sold in Scotland in November was a £2.9 million five-bedroom detached home in Dirleton, North Berwick, East Lothian, overlooking The Renaissance Golf Club course and the Firth of Forth. Golf is a recurrent theme in the sale of high value homes.

Transactions analysis 

Figure 2 below shows the monthly transaction count for purchases during the period from January 2019 to November 2023, based on Registers of Scotland (RoS) figures for the Date of Entry (except for November 2023, which is based on RoS Application Dates).

The first year on the Chart, 2019 (light blue line), was relatively “normal” having an average 8,560 sales per month, some 2.1% higher than the total for 2018, but -0.3% lower than 2017. 

As can be seen, 2020 (the turquoise line) was more varied, the Covid pandemic having manifested itself in March 2020, with the first lockdown taking place in April 2020, when the market slumped to just 2,637 sales.

There was then a slow path to recovery during the remainder of 2020 with a peak in transactions in October 2020 of 13,045 sales, as the benefit of the LBTT tax holiday and the mantras of the “race for space” and “work from home” came to the fore. 

There was a second peak in transactions in March 2021 (the brown line), as purchasers scrambled to take advantage of the tax holiday, before its cessation on April 1st 2021.

In 2022 (the red line), house purchases returned to near normality, with the first nine months of 2022 seeing an average 8,600 sales per month. However, Liz Truss came into power on 6 September 2022, with her mini-budget, which resulted in the bank base rate being raised to 2.25%. The bank rate was further increased on 3rd November and 15th December 2022, ending the year at 3.5%.     

Figure 2.The number of sales per month recorded by RoS based on entry date from 2019 – 2023

A graph of a number of registrations Description automatically generated

This brings us to the current year of 2023 (the black line) – the relatively high bank rate of 3.5% had an adverse effect on property transactions, with only 5,893 sales for January 2023 – the lowest January total since 2013. Although the housing market in 2023 did enjoy the spring bounce in transactions that occurs traditionally in March, the bank base rate was increased a further five times in 2023, reaching 5.25% on 3rd August 2023 (the current rate). Over the first eleven months of 2023, sales are down by 12.3% compared to the equivalent period in 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 – November 2023

Sales of £750k+       
Month201520162017201820192020202120222023
1332719354449658875
2422015522633626953
323157253435301158076
422729243611467068
5142031325416639069
6264743416036119112102
7153655446141121136106
8415462606140102126105
9464456705967127135

…

Scottish house prices rise again in February to an annual 8.2%

  • Shortage of housing stock continues to support prices
  • Scotland’s monthly rate of 1.5% is highest since August
  • Private annual rental growth is at highest rate since records began, encouraging buy-to-let investment
  • Average Scottish House price in February 2022 is £218,702, a monthly increase of 1.5% & annual increase of 8.2%

Heat Map

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

Scott Jack, Regional Development Director at Walker Fraser Steele, comments: “Scotland continues to see record average house price growth with the average price paid for a house in February this year reaching £218,702 – a price £16,600 higher than at the same time last year. It continues the trend from January and, on a monthly basis, this means prices in February rose by 1.5% – the highest increase in a month since August last year.

“As a piece of context, in February this year, all the regions in England and Wales established new record average house price levels, but it is fair to say that the Scottish property market has robustly withstood one of the most seismic events in living memory in the past couple of years.

“The reasons for this strong performance remain constant across the UK. We are still seeing the results of people choosing to change the way in which they work and where they choose to do this. While inflation and interest rates are rising (albeit it at different paces), we still enjoy relatively low borrowing costs. The supply of desirable property remains constrained so there is a lot of competition for the most desirable property.

“It seems that the pandemic’s impact on our ability to spend, which includes disposable income for socialising and holidays, has meant people have saved for more fundamental things such as a house purchase. Also, the rise in house prices during the period means that existing homeowners have benefitted from an increase in the equity in their homes meaning they can move up the ladder.”

Commentary: John Tindale, Acadata Senior Housing Analyst

The February housing market

The average price paid for a house in Scotland in February 2022 was £218,702, which sets a record price for the country – this is the seventh occasion that this has happened in the last twelve months.

This price is some £16,600 higher than that seen in February 2021, indicating that prices have risen by 8.2% on an annual basis. This rate is also some 1.1% up on the 7.1% recorded in December 2021, with both January and February of 2022 having witnessed an increase in house prices.

On a monthly basis, prices in February 2022 rose by 1.5%, or around £3,200. This is the highest increase in a month since August 2021.

Figure 1. The average house price in Scotland over the period February 2020 to February 2022 with trendline

Scotland is not alone in seeing house prices continuing to rise. In February 2022, all nine GOR regions in England and Wales established new record average house price levels, although only Wales had an annual growth rate higher than that of Scotland, at 8.9%.

So what is causing this ongoing upward movement in prices, particularly at a time when many commentators had been expecting to see a slowing in the growth rate, as increased cost of living pressures begin to bear down on consumers?

As we reported last month, in general terms we are still living with the effects of the pandemic, and the “lifestyle” changes this has brought about – in particular the “Work from Home” edict has encouraged many to move to larger premises with outdoor facilities – the so-called “Race for Space”.

There is still high demand for such homes, but supply is limited, so there continues to be strong competition for the properties that do come onto the market, with resultant price increases.

Additionally, the ONS advises that private rental prices in Scotland have grown by 2.6% in the 12 months to February 2022, which is the highest annual growth rate for Scotland since records began in 2012.

If this figure looks low, we should point out that the ONS private rental index not only measures the change in newly advertised rental prices, but also reflects price changes for all existing private rental properties.

This increase in rental growth rates is encouraging some investors to consider purchasing buy-to-let properties, adding to the already buoyant demand for homes that currently exists.

Transactions analysis

Monthly transaction counts

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

The graph shows that of the eight years on display, all – bar 2020 and 2022 – have February as being the month with the lowest transaction count of the year.

This in part is a knock-on effect from the Christmas holidays, when estate agents are often closed from Christmas Eve to the New Year – with the Date of Entry on completion of the sale often taking five to six weeks from the date at which the property was first put on the market.

In part, it is also due to the reduced daylight hours at the turn of the year, which restricts would-be buyers from visiting prospective properties.

If we remove the pandemic-related years 2020 – 2022 from our calculations, then the average number of sales in February for the seven years 2013 – 2019 amounts to 5,340 transactions, compared to August, which has the maximum number of sales of any month at an average 9,368 transactions – a 75% increase on February.

Our monthly statistics also show that there is a seasonal variation in the prices being paid across the year, with February typically seeing a 2.5% reduction in the average price paid, and the highest prices typically being achieved in September/October when prices are some 2.0% higher than average.

Allowing for the five-to-six weeks’ time span from putting a home up for sale to the Date of Entry, this will mean that generally the lowest prices are accepted for a property in December / January, and the highest prices are often achieved in August / September. In our house price calculations, we adjust the data to take these known seasonal variations into account.

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

Scotland transactions of £750k or higher

Table 2. The number of transactions by month in Scotland greater than or equal to £750k, January 2015 – February 2022

Table 2 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 2 shows that there were 39 sales in excess of £750k during February 2022, and we anticipate that this number will increase as further sales for the month are processed by the Registers of Scotland. However, as discussed earlier, February typically has the lowest number of property sales in the year, so there should not be too much concern about the relatively low number of high-value sales that occurred in the month.

The seven authorities with the largest number of the 119 high-value sales that have been recorded to date in 2022 are: Edinburgh (59); Glasgow City (11); Fife (8); East Lothian (5); East Dunbartonshire (4); East Renfrewshire (4); and finally Perth and Kinross (4).

The 59 high-value sales in Edinburgh amount to 4.6% of the total 1,292 sales that have been recorded in the capital in 2022 to date. This compares to a figure of 1.1% to the end of February – which the 119 high-value sales represent – when compared to Scotland’s total number of 11,041 transactions recorded by the Registrar.

The high-value ratios for the remainder of the seven authorities listed above are – East Lothian 2.6%; East Dunbartonshire 2.4%; East Renfrewshire 2.1%; Perth and Kinross 1.3%; Fife 1.1%; and finally, Glasgow City 0.9%.

Local Authority Analysis

Table 3. Average House Prices in Scotland, by local authority area, comparing February 2021, January 2022 and February 2022

Table 3 above shows the average house price and percentage change (over the last month and year) by Local Authority Area for February 2021, as well as for January and February 2022, calculated on a seasonal- and mix-adjusted basis.

The ranking in Table 3 is based on the local authority area’s average house price for February 2022. Local Authority areas shaded in blue experienced record average house prices in February 2022.

Annual change

The average house price in Scotland has increased by some £16,600 – or 8.2% – over the last twelve months, to the end of February. This is a £1,300 increase over the revised £15,300 growth in prices seen to the end of January 2022, and represents approximately half of the annual average gross pay of those working in Scotland in 2020/2021.

In February 2022, 30 of the 32 local authority areas in Scotland saw their average prices rise over the previous twelve months. The two areas with price falls compared to one year earlier were Clackmannanshire and Aberdeen City.

In Clackmannanshire all property types, excepting terraces, saw a fall in their average values, but the authority has the lowest number of property sales per month of all the Local Authorities on the mainland, which tends to produce volatile movements in the average price, especially when measured in percentage terms.

In Aberdeen City, it is the average price of terraces and flats that have seen a fall over the last twelve months. However, in Aberdeen, there is a strong correlation between house prices and the price of crude oil, and as suggested last month, we anticipate that property values will begin to increase relatively soon, following the recent dramatic rise in oil prices.

The area with the highest annual increase in average house prices in February 2022 was the Orkney Islands, where values have risen by 28.6% over the year: however, like Clackmannanshire this statistic is based on a low volume of sales (13 transactions in the Orkney Islands in February 2022).

On the mainland, the highest rise in prices occurred in Inverclyde, up by 16.5% over the year, this statistic having been assisted by the February purchase of the second-highest priced home in Inverclyde of the last twelve months.

The property concerned is a five-bedroom detached home in Kilmacolm, located approximately 15 miles to the west of Glasgow, which sold for £1.45 million.

Monthly change

In February 2022, Scotland’s average house price in the month rose by some £3,200, or 1.5%, which is the highest increase of the last six months. The average price of a home in Scotland now stands at £218,702, which sets a new record level for the nation for the seventh time in the last twelve months.

In February 2022, 21 Local Authority areas in Scotland experienced rising prices in the month, the same number as one month earlier.

The largest increase in average prices in February, of 9.3%, occurred in East Renfrewshire. The price of all property types, except for flats, increased in East Renfrewshire in February, with the highest increase occurring in detached properties, up from an average £425k in January to an average £495k one month later.

These dramatic changes in price are frequently seen in February, due to the low overall level of sales in the month. In this instance, the average price for East Renfrewshire has been elevated by the purchase of the area’s most expensive detached property of the last twelve months for £1.95 million.

The property, which is located in Giffnock, is some 6 miles to the south of Glasgow centre and is less than half a mile from Whitecraigs railway station, with a direct service into Glasgow Central station, having a journey time of approximately 20 minutes. Giffnock is frequently referred to as being amongst the most affluent areas in Scotland.

Peak Prices

Each month, in Table 3 above, we highlight in light blue the local authority areas which have reached a new record in their average house prices. In February there are 18 such authorities, three more than in January. We can also add that Scotland itself has set a record average price in February 2022 – the second of the year.

Heat Map

The heat map below shows the rate of house price growth for the 12 months ending February 2022. As reported above, all but two of the 32 local authority areas in Scotland are reporting an increase in their house values over the last year. The two areas with negative growth are Clackmannanshire and Aberdeen City, where prices over the year have fallen by -2.8% and -0.9% respectively. The highest increase over the twelve months to February 2022 was in the Orkney Islands at 28.6%, followed by Inverclyde at 16.5%.

Comparisons with Scotland

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

Scotland’s Seven Cities

Figure 5. Average house prices for Scotland’s seven cities from December 2020–February 2022

Figure 6. Average house prices for Scotland’s seven cities February 2022

Scotland’s housing market ends 2021 on a high

House Price Index for Scotland in December from Walker Fraser Steele

Key points:

  • Average house price £213,646
  • Monthly change up 0.4%, up 7.7% annually
  • 31 of 32 Local Authorities continue to see average prices rising over the year
  • Transactions up by 11% on 2019 levels
  • The Lothians have seen the highest price increases during the last ten-years

Alan Penman, Business Development Manager at Walker Fraser Steele, comments: “This can only be described as an exceptional annual performance with thirty-one of the thirty-two Local Authority areas in the country recording rising prices over the last twelve months.

“Though we can see from our data that the annual rate of price growth has begun to slow in pace, house prices continue to rise ending the year on a new high of £213,646. When we look back at the start of the year, this figure is in stark contrast with the average value of £198,384. It is incredible to think that December 2020 was the last month in which Scotland’s average house price was below £200,000.

“When you step back, as we have in this report, and cast your eye over what has happened to house prices in the last 10 years in Scotland, the percentage rise in Scotland’s average house price is some 38%.

“The last five years accounts for most of this growth and in particular the pandemic period when the demand for bigger properties to accommodate post-pandemic working and living needs and the lack of suitable stock have supported growth.

“The Lothians have benefitted most with Edinburgh’s commuter belt experiencing considerable activity during the pandemic as buyers seek plenty of space outside the city centre, but within reasonable commuting distance.”

Commentary: John Tindale, Acadata Senior Housing Analyst

The December housing market

In December 2021, the annual rate of house price growth has continued to slow, for the third month in succession, and now stands at 7.7%. This is down from a peak of 13.1%, recorded in September 2021. However, the rate of fall in December was the lowest of the last three months, amounting to a 1.4% reduction from November’s rate of 9.1%, which itself was 2.3% down on October’s rate of 11.4%.

In Table 2 on page 5, we show that the number of homes that were purchased at a price of £750k or higher has reduced from a peak of 127 – which occurred in September 2021 – and now amounts to 74 such properties in December, although this number is likely to rise as further purchases are processed by Registers of Scotland during this next month.

Even though the annual rate of price growth has started to slow, prices are continuing to rise, with 31 of the 32 Local Authority areas recording rising prices over the last twelve months. Scotland has ended the year on a new high of £213,646, which contrasts with a value of £198,384 at the start of the year – December 2020 being the last month in which Scotland’s average house price was below the £200,000 threshold.

On pages 9 and 10 of this report we cover the change in house prices in Scotland over a ten-year period, from December 2011 to December 2021, which makes for interesting reading. Scotland’s average house price over this time has risen by some 38%, the majority of this growth having taken place during the last five years and especially since the start of the pandemic.

Analysis shows that, on the mainland, the Lothians that have seen the highest growth in house prices over the last ten-years – suggesting that it is Edinburgh’s commuter belt that has witnessed considerable activity during the pandemic, with many purchasers looking for a home with plenty of space outside the city centre, but still remaining within reasonable commuting distance of the capital.

Transactions analysis

Monthly transaction counts

Figure 2 below shows the monthly transaction count for purchases during the period January 2015 to December 2021, based on RoS (Registers of Scotland) figures for the Date of Entry. (December 2021 figures are based on RoS Application dates.)

The fall in the number of transactions at the onset of the pandemic in March/April 2020 is clearly visible – the March 2020 property sales that actually took place would largely have been agreed prior to the commencement of the first lockdown in Scotland on 24 March 2020.

However, what is also clear is the recovery in sales during the summer of 2020, followed by an acceleration from August 2020 to a peak of 13,028 transactions in October 2020 – the highest number in a single month since November 2007.

It can be seen too that sales per month from September 2020 to March 2021 were at higher levels than the previous five years, as the market played ‘catch-up’ with the transactions lost during the spring and early summer months, and also benefitted from the LBTT tax reductions available from 15 July 2020 to 31 March 2021 (inclusive).

Also noteworthy is the spike in sales in March 2021 – as the tax reduction expiry date approached – as is the fall in sales in April 2021, indicating the extent to which buyers had managed to bring forward their purchases into March 2021 to take advantage of the LBTT tax savings.

Sales volumes from May to November 2021 look roughly on a par with, or slightly ahead of, previous years, perhaps suggesting that the market has now returned to its pre-pandemic transaction levels.

Comparing total sales in 2020 with those of 2019, there was a 13% fall in the overall size of the market. However, looking at the total number of transactions in 2021 and comparing them to 2019 (2020 figures are distorted by the lockdown in the early stages of the pandemic), sales are up by 11%, although this does include the spike in March 2021, which will have enhanced the 2021 totals.

Scotland transactions of £750k or higher

Table 2 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 2 shows that there have been 1,088 sales in excess of £750k during 2021, and we anticipate that there will be at least a further 26 additional sales in December 2021, not yet recorded by the Registers of Scotland and hence not included in the above total.

Sales of high-value properties in 2021 will therefore likely reach 1,100 in number, once RoS updates its figures, which are due to be published at the end of February. Hence annual transactions of £750k or higher in 2021 will likely be double those in 2018 and 70% higher than in 2020.

The reasons for this dramatic increase in top-end sales in 2021 are, as previously discussed, partly to do with the change in preference for larger properties.

Home movers were thus encouraged to look for premises which better suited their updated needs. But additionally we should mention the record low interest rates, which made the purchase of a top-end property more affordable, as well as the tax savings associated with the LBTT holiday, available up to the end of March 2021. This encouraged the whole market to be more adventurous in its outlook.

However, even with the additional 26 as yet unrecorded sales being taken into account, December 2021 will be the third month in a row in which the number of homes purchased with a value of £750k or higher will be lower than that recorded in the same month of the previous year.

For the record, the five areas with the highest number of sales of £750k or above in 2021 were (with the number of high-value sales in brackets):- City of Edinburgh (547); Glasgow City (90); East Lothian (61); Fife (41); and Perth and Kinross (41).

Annual change

The average house price in Scotland has increased by some £15,250 – or 7.7% – over the last twelve months, to the end of December. This is a reduction from the £17,700 growth in prices seen to the end of November 2021, and is now the third month in succession in which the annual rate of house price growth has slowed, having reached an annual rate of 13.1% in September 2021.

In December, Scotland’s growth rate trails Wales rate of 8.5% by 0.8%, but in percentage terms is still higher than seven of the nine GOR regions in England, including that of Greater London.

In December 2021, 31 of the 32 local authority areas in Scotland saw their average prices rise over the previous twelve months. The one area with a price fall compared to one year earlier was East Renfrewshire, where prices of detached homes have fallen from an average £440k in December 2020 to £427k in December 2021.

Part of this reduction in the average price of detached homes in East Renfrewshire was due to a fall in the number of homes that sold for more than £750k – there were five such homes purchased in December 2020, but only two in December 2021. This is symptomatic of a general, but still relatively slight, reduction in the purchase of high-value homes in Scotland during the final quarter of 2021.

The area with the highest annual increase in average house prices in December was the Orkney Islands, where average prices have risen by 28.5% over the year – sales this month included a delightful detached property in St Ola which sold for £820k. On the mainland, the highest rise in prices over the year occurred in Stirling where average prices rose by 16.7%. Sales in the month included 4 homes valued at over £750k, including a 4-bedroom new build detached property in Blair Drummond, located some 5 miles to the North West of Stirling and overlooking the Trossachs.

Monthly change

In December 2021, Scotland’s average house price in the month rose by some £900, or 0.4%, compared to a rise of £200 in November. The average price of a home in Scotland now stands at £213,646, which sets a new record level for the nation for the eighth time in the last twelve months.

In December, 19 Local Authority areas in Scotland experienced rising prices in the month, with 13 seeing prices decline. The largest increase in average prices in the month of December, of 10.6%, was in Na h-Eileanan Siar, followed by the Orkney Islands at 7.1%: however, as often stated on these pages, Scotland’s Island groups tend to see volatile price movements, due to the low number of sales that take place each month.

On the mainland, East Lothian saw the largest increase in prices in the month, of 4.9%. This increase in its average price was helped this month by the purchase of the second most expensive detached home in East Lothian of the last twelve months, for £2.1 million. The home, which has six bedrooms, is located in North Berwick, approximately 0.5 miles from the Railway station. Interestingly, North Berwick was recently identified in the Daily Telegraph as being one of the most favourite commuter locations for Edinburgh, with a travel time of 30 minutes into Waverley Station. As a result of this high value transaction, the average price paid for properties in the area increased in the month and has resulted in East Lothian currently having the highest average property price of all the 32 Local Authority Areas in Scotland, pushing Edinburgh down into second place (see Table 3). The last time that East Lothian topped this Table was in March 2016.

Peak Prices

Each month, in Table 3 above, we highlight in light blue the local authority areas which have reached a new record in their average house prices. In December there are 14 such authorities, the same number as in November. We can also add that Scotland itself has set a new record average price in December 2021 ~ ending the year on a high!

Heat Map

The heat map below shows the rate of house price growth for the 12 months ending December 2021. As reported above, all but one of the 32 local authority areas in Scotland are reporting an increase in their house values over the last year. The one area with negative growth is East Renfrewshire, where prices over the year have fallen by -1.2%. The highest increase over the twelve months to December 2021 was in the Orkney Islands at 28.5% – on the mainland it was Stirling that was top with price growth of 16.7%.

Scotland’s housing market – The last ten years

Given that we are reporting on December’s housing data, we considered it would be an appropriate opportunity to take a longer-term view of Scotland’s housing market. Figure 3 below shows the average house price in Scotland for the period December 2011 – December 2021.

The graph starts in December 2011 in the aftermath of the banking credit crisis of 2008/09, with prices still falling by -3.4% on an annual basis to December 2012 – the lowest point on the chart. However, from December 2012 onward prices began to climb with annual growth remaining at a near constant of some 3% per annum up to the start of the Covid pandemic in March 2020.

There is an interesting and very noticeable spike in prices which occurred in March 2015, which reflects the period immediately ahead of the introduction of the then new LBTT (Land and Buildings Transaction Tax – which replaced the previous UK-wide SDLT (stamp-duty land tax)) coming into force on April 1st 2015. House purchasers in the first quarter of 2015 looked to forestall the new tax by purchasing high-value properties prior to its introduction, causing a substantial rise in average house prices at the time.

After an initial dip in house prices at the start of the pandemic, the market recovered, partly spurred on by the change in lifestyles, reflecting a movement to work from home – the so-called “race for space”, with prices also climbing due to the LBTT tax holiday, the low interest rates resulting in properties becoming more affordable, and the increase in household savings as expenditure on items such as foreign holidays and other luxuries diminished.

A dip in prices can also be seen in April 2021, as the LBTT tax-holiday came to its end, but price growth subsequently recovered, reaching a peak of 13.1% on an annual basis in September 2021. The current annual rate of 7.7% in December 2021 closely matches the rate of 7.5% seen in December 2020.

Table 4 above splits the ten-year period into two groups of five years. As can be seen, the larger increase in prices occurred during the last five years – with the highest growth rates happening during the pandemic from June 2020 onward.

Looking at the ten-year time span, the highest growth in prices was in the Orkney Islands at 79.9% – but this is likely to have been a function of purchasers buying second homes on the Islands for personal use or for holiday-home lets.

However, looking at the ten-year period for areas on the mainland, the top three spots in house price growth are taken by the Lothians, with Midlothian at 62.2%, East Lothian at 54.6% and West Lothian at 53.8%. This suggests that it is the commuting areas in close proximity to Edinburgh that have seen the highest growth in prices over the last ten-years.

Inner city Edinburgh sees rental growth of 7.2% year on year

  • Average annual UK rental growth* has reached a 13 year high, with rents increasing to £969 (+8.3%) in Q4 2021, up £62 per month since the start of the pandemic 
  • The average rent now accounts for 37% of gross income for a single earner – up from a pandemic dip of 34% during most of 2021 but broadly in line with the 10-year average of 36%
  • Overall, average rents are up nearly 12% over the last five years 
  • Demand for rental properties in January was 76% higher compared to the New Year market between 2018 and 2021 
  • The stock of rental properties currently available across the UK is 39% lower than the five year average around this time of year
  • Inner city London has seen a rental growth of 11% compared to the same time last year -but the decline in rents during the pandemic means this has translated into an increase of just £18 per month in rent compared to March 2020

Average UK rents are tracking at almost £1000pcm – £62 more than at the start of the pandemic – against a backdrop of increased living costs squeezing households, reports Zoopla, the UK’s leading property portal, in its quarterly Rental Market Report.

UK rents squeeze disposable household income as cost of living rises

The UK’s average rental growth has reached a 13 year high, up 8.3% in Q4 2021, meaning households who agree new lets are now having to pay an additional average annual cost of £744, compared to the start of the pandemic (March 2020). 

This increase means that a single earner can now expect to spend 37% of their gross income on rent, which is up from 34% during most of 2021. However, this now brings the figure broadly back in line with the longer term average of 36% as rental growth rises in line with wage growth.

Even with the current sharp rise, the overall increase in UK rents over the last five years totals 12% thanks to the decline in rents seen in some areas during the pandemic. 

Rental market shrinks as demand creates fast-paced rental landscape

The New Year has seen heightened demand for rental properties, up +76% compared to the New Year markets between 2018 and 2021. Yet the supply of rental properties recorded in January 2022 in the UK is 39% below levels typically observed at the start of the year. This is creating competition in the market,  with the imbalance of supply and demand ultimately spurring rental growth. 

As a result, properties are being snapped up. In London, this means renters are having to move quickly to secure the perfect property with the time to let now averaging a fortnight, down from three weeks in late 2020. 

This shrinking stock of homes for rent can be attributed to a continued decrease in buy-to-let investment over the last five years.. As rents rise, more renters will be choosing to stay in their properties, limiting stock turnover. With supply squeezed, it’s likely that continued demand will underpin more modest rental growth in the coming months, especially in city centres.

However, as the spike in demand falls back – hampered by the increases in household costs – it will reduce pressure on supply, ultimately driving more local competition to attract renters in local markets. 

City centre rents continue upward growth trajectory 

Pandemic trends saw strong growth in rental demand in wider commuter zones as renters embraced the ‘search for space’, but demand has now recovered across the central districts of all  major cities including Birmingham, Edinburgh, Leeds and Manchester in a reversal of recent behaviour. This is largely driven by pent up demand from office workers, students, and international residents and investors who are looking for city centre living. 

This is a normalisation of rental behaviour as demand once again rises in more central zones – seen most prominently in inner London with rental growth of 11% compared to the same time last year. But given the steep fall in London rents during the pandemic, this translates to an increase of just £18 per month in rent compared to March 2020.

Gráinne Gilmore, Head of Research, Zoopla, comments: “Rents have risen sharply in recent months, amid a backdrop of rising living costs. But it is important to point out that in terms of rental affordability, in most markets rents are still close to the 10-year average. As demand continues to outpace supply, there will be further upward pressure on rents, but affordability considerations will act as a brake on large rises. 

“In addition, the January peak in rental demand will start to ease in the coming months, putting less severe pressure on supply, which will lead to more local market competition, and more modest rental increases.  

“The flooding of rental demand back into city centres thanks to office workers, students and international demand returning to cities means the post-pandemic ‘recalibration’ of the rental market is well underway.” 

James Evans, CEO at Douglas & Gordon, comments: “Since the beginning of the year, we have seen a clear trend of people coming back to London and the office. This has contributed to around a 40% increase in new lettings applicants compared to the same month last year.

“As there is also still a very restricted supply of properties, we’re seeing landlords achieve record prices, a high quality of tenant and almost no void periods. With competition for properties at the level it is, there are 35-40 new applicants for every rental property in London and around four offers received per agreed let, so tenants are having to put themselves in the best position possible to get the properties they want. 

“Following a strong sales market in 2021, and more confidence in future price increases in London, we are seeing more buy to let investors entering the market. With some of the recent legislation changes, the need for a quality agent is even greater.”

* Based on new lets as recorded by Zoopla

Scotland’s October House Price Index from Walker Fraser Steele

Headlines:

  • Average house price in Scotland up by 11.4% over last 12 months
  • Monthly growth rates starting to soften
  • 31 of 32 Local Authorities have rising average prices over year to end October
  • Scotland again outperforming England, Wales & NI
  • £750k+ house sales double that of Jan – Oct 2020

Alan Penman, Business Development Manager at Walker Fraser Steele, comments: “The continued story of Scotland’s successful year for higher priced properties continues.

“The average house price in Scotland has increased by some £21,800 over the last 12 months but our data shows there have been 872 sales over £750k (the point at which the highest rate of Land and Buildings Transaction Tax (LBTT) is applied) during the first ten months of 2021.

“We expect up to 30 additional sales in October 2021, not yet recorded by the Registers of Scotland and so not included in the above total. This would mean sales of these higher-value properties to the end of October 2021 would likely be double in number to those of the first ten months of 2020.

“What we are seeing is the impact of the cut in LBTT earlier in the year, the continuation of low interest rates and cheaper mortgage finance, and the desire of many purchasers during the pandemic to buy bigger properties in the race for space. These factors have meant higher-end properties have played a significant part in the overall growth figure.

“Sales volumes from May to October 2021 are only slightly ahead of previous years, and suggest that the market has now returned to pre-pandemic transaction levels. Nevertheless, the continuing strong performance in October means Scotland had the highest annual rate of house price growth of the four home nations with annual growth at 11.4%, followed by Northern Ireland at 10% (Ulster University Index), Wales at 9.6% and England, without Wales, at 3.9%.”

Commentary: John Tindale, Acadata Senior Housing Analyst

The October housing market:

Scotland’s October housing market is starting to show some signs of slowing in terms of price growth, but it’s necessary to look quite hard for the evidence. We provide four possible indicators:-

Firstly, we can point to an actual reduction in the average house price in October, with the value now standing at £212,551 – but this is only £70 lower than the previous month. However, it does bring to an end a three-month run from July to September 2021, in which average prices rose by an overall £11,000.

Secondly, we can show that in October only some 90 homes in Scotland were sold at a price in excess of £750k, compared to 120 in September. Nevertheless, we could point out that – if we looked at the monthly totals prior to October 2020, ie one year earlier – then 90 sales in a single month having a value over £750k would have set a new record at that time.

Thirdly, the average house price in both Edinburgh and Glasgow fell in October, with the two cities collectively accounting for approximately 25% of all property sales in Scotland. But we could also point out that the same happened in both October 2017 and October 2019, with Scotland’s average house price for those two years showing continued positive growth.

Lastly, and perhaps the most compelling argument is that England and Wales have seen their house price growth start to fall. Figure 1 below compares Scotland’s annual rate of growth, which was at 11.4% in October, with that of England and Wales combined, where rates have fallen to 4.1%. In fact, eight of the nine regions in England saw their annual rates of growth fall in October. (For a comparative Table go to Figure 4 and follow the link.)

In October, Scotland had the highest annual rate of house price growth of the four United Kingdom countries, at 11.4%, with Northern Ireland in second place at 10% (Ulster University Index), followed by Wales at 9.6% and England, without Wales, at 3.9%. England has started to see a reduction in the number of high-value detached properties being sold – perhaps due to a shortage in the level of available stock – resulting in average prices beginning to fall.

Walker-Fraser-Steele-Acadata-House-Price-Index-Scotland-October-2021-003Download

Scottish developer aims for hole in one with Juniper Green project

An Edinburgh-based property developer has broken ground on a new housing project on the outskirts of the city, with support from Bank of Scotland.

Gallo & Gallo Developments is a family-run business that specialises in developing luxury residential properties across Edinburgh. The firm is run by Riccardo and Mary-Anne Gallo, with Riccardo overseeing the construction process while his wife Mary-Anne specialises in interior design through her own company, Mary-Anne Gallo Interiors.

Since 2008, the business has renovated and developed properties across Edinburgh, helping it achieve an annual turnover of more than £3 million.

Now, the firm is focused on plans for a new five-property development beside Baberton Golf Club in Juniper Green. To facilitate the project, Gallo & Gallo Developments approached Bank of Scotland, securing a seven-figure development funding package to support the build of the new homes.

The new development will feature four ‘upside down’ townhouses, with kitchens and living rooms located on the top floor to take advantage of the views of Edinburgh Castle, while the bedrooms will be located on the lower floors. The former professional golf shop at Baberton Golf Club will also be converted, taking the total number of townhouses to five.

The new homes are designed for families and early retirees and are expected to complete by early Spring 2022.

Gallo & Gallo Developments is also planning to embark on its first venture outside of Edinburgh, with a new multi-unit project in Gullane, East Lothian. This development is expected to go live mid-2022.

Riccardo Gallo, director at Gallo & Gallo Developments, said: “Myself and Mary-Anne have always had a passion for property development and renovation, and we’ve spent more than a decade expanding our footprint here in Edinburgh.

“When we spotted the opportunity in Juniper Green, we knew it would be the perfect next venture for us. While the scale of the development meant it would be our biggest challenge to date, it’s a tremendously exciting project for us. Thanks to Bank of Scotland, we’ve been able to secure the finance required during a time where demand for residential property in the capital continues to grow. 

“That said, this demand is extending with people increasingly keen to live beyond the city limits. This is why we’re hoping to break ground on a new development in Gullane in summer next year and continue to grow our portfolio across the central belt of Scotland.”

Douglas Spowart, relationship director at Bank of Scotland, said: “The latest monthly House Price Report from ESPC has shown that house prices in Edinburgh are still rising as buyer demand continues to outweigh supply.*

“Gallo & Gallo Development’s new project will provide a range of new properties for families in Edinburgh and boost the supply of residential properties in the city.

“We’ll continue to support the business as it continues on its growth journey, and also stand by firms in other sectors as they look to take advantage of new and exciting growth opportunities.”

* https://espc.com/news/post/house-price-report-october-2021

‘Bank of Mum and Dad’ continues to fuel Scottish property market

  • Parents and grandparents are choosing to pass on wealth early to help children get on the ladder
  • Over a third (35%) of High Net Worth Individuals (HNWI) and business owners in Scotland have met a financial planner for guidance on passing on wealth
  • A third of individuals have spoken with their loved ones about how they will distribute their assets
  • But only 2 in 10 (19%) have created a will

The ‘Bank of Mum and Dad’ continues to fuel the Scottish property market as parents and grandparents choose to pass on wealth early to help the younger generation get on the ladder according to research by Rathbone Investment Management.

Home ownership continues to remain out of reach for many young people, with house price growth increasing by 6.9% across Scotland in the last twelve months.[2] The COVID-19 pandemic has also caused financial difficulty for many and has exacerbated the challenges facing young people wishing to get onto the ladder. The ‘Bank of Mum and Dad’ has therefore stepped in to support.

Rather than passing down via inheritance with the risk of a large tax liability, 28% of those surveyed have or are considering passing on their wealth early in order to help children and grandchildren with property purchases or other significant expenses. 29% of individuals have put money into a trust for their children or grandchildren, and a quarter (26%) have contributed to their university expenses.

The decision to pass wealth down early is partly down to a larger trend over the last year that saw many look to get their financial affairs in order. Indeed, with national lockdowns and continuing social restrictions in place, many people have had more time to plan ahead and explore ways in which they can put a financial plan in place.

Over a third (35%) of Scottish High Net Worth Individuals (HNWI) and business owners surveyed have met a financial planner for guidance on passing on their assets.

More widely, a third of individuals (33%) have spoken with their loved ones about their financial plans for the future. However, only a fraction of people have made these plans official. Indeed, just two in ten surveyed (19%) have made a will.

Kindar Brown, senior financial planner at Rathbone Investment Management: “COVID-19 has caused many individuals to think about how they might best support their loved ones financially. The difficulty of getting onto the property ladder has called for the ‘Bank of Mum and Dad’ to step up and provide a helping hand.

“With all the events of the last twelve months, putting a financial plan in place has moved further to the front of many peoples’ minds, highlighted by the uptick in enquiries to speak with a financial planner.

“Taking the time to review your financial affairs now and make sure everything is in order can provide peace of mind that your loved ones will be protected, and your wishes met, should the worst happen.

“As part of your plan, you could for example consider whether passing on wealth during your lifetime rather than within your will would make sense for your circumstances.

“If you won’t have need of the money in the future, then helping your children or grandchildren with those important – and often costly – life stages could be an effective and tax-efficient route to take, depending on your situation.”

Things to consider when creating a financial plan

Establish a financial plan

A good financial plan starts with aspirational goals – it is about focusing on what is important to you and what you want to achieve. It can help you determine whether you are on track to meet your goals and help you envisage your financial future.

You might want to plan for retirement and understand how much you will need to afford you the lifestyle you wish or perhaps you are concerned about the costs of long term care or making sure your family are provided for in the event of your death? Once you understand how much you require to meet your own lifestyle goals, you can identify how much you can afford to gift to your family during your lifetime without leaving yourself financially vulnerable.

A financial planner can guide you through the various aspects and help you put a plan of action in place. 

Make a will and regularly review it

Although creating a will may seem a little daunting, it’s a good place to start when looking to get your financial affairs in order. A correctly drafted will can ensure that your wealth is distributed to your loved ones as you wish and can prevent delays in doing so. 

It’s important to regularly review your will in order to ensure it reflects your current wishes. This is particularly important after life events like marriage, divorce and the birth of children or grandchildren. 

Consider whether you want to gift and how much

Once you’ve established your financial plan and your will has been drafted, you will have a better understanding as to whether making gifts to your family is affordable.  Gifting during your lifetime can be an efficient way to pass on wealth and help reduce the inheritance tax payable on your estate when you die.

There are a number of gifts you can make without paying tax including an exempt amount of £3,000 per annum and unlimited small gifts of up to £250 per person.

You can also of course gift larger amounts, however if you die within seven years of making the gift it may be liable to inheritance tax depending on the value of your estate

Five ways to convert existing space at home to add up to 20% value in lockdown

Making the most out of existing space could drastically add to the value of a property, with additional bedrooms increasing the value by as much as 20% according to experts, or £51,200 considering the average house price in England (£256,000).

The research by self-storage company, Space Station, found several ways in which homeowners can increase the value of their homes without paying for an extension, and instead simply making the most of existing space in a property.

Creating an open plan living area, installing an additional bathroom, or adding another bedroom can all be accomplished for a lot less than the cost of an extension, and in many cases, this does not require planning permission.

Here are five ways you can maximise existing space to increase property value:

1.      Convert a room into a bedroom (20% increase in value, £51K of average house price)

Converting the purpose of a room can add extra value to a property and costs very little to do effectively.

Having an office or a games room may seem desirable, but when it comes to adding value, the number of bedrooms is the figure buyers pay the most attention to, so converting a room into a bedroom will see the greatest increase in value.

As a compromise, consider making a room dual purpose, allowing it to serve as both a guest bedroom and a home office.

Holly Herbert, from We Buy Any House, said: “Not every homeowner is in a position to renovate their property, so thankfully there are other things that they can do on a budget instead.

“A great option is to use an existing room as another bedroom, especially if you have office space. Adding a bedroom to a property can increase the value by up to 20% and can be done easily enough with some redecorating and reorganising.”

2.      Convert your loft space (20% increase in value, £51K of average house price)

Alternatively, a more expensive solution is to invest in a loft conversion. This is especially useful if you do not have spare rooms which you’re able to convert, or if you want to increase the number of bedrooms whilst keeping your office space.

As lofts are generally used for storage, some homeowners may be left with a temporary shortage of space for these items. This can easily be solved however by temporarily renting storage whilst you undertake the work. Long term, you can find inventive and creative ways to create storage as part of the loft conversion, by installing storage units in the dead space.

Holly said: “For homeowners who are keen to add an extra room but don’t have an office space or dining area to sacrifice, a loft conversion can be the perfect solution.

“You will need to make sure that if you’re intending to advertise your loft conversion as another bedroom that it’s up to regulations, as it will need to be a certain size and have a door, as well as being safe.”

3.      Create an open-plan living area (15% increase in value, £38K of average house price)

Open plan living areas are incredibly desirable for house-hunters, and they are a great way to make your living area and kitchen feel modern and bigger than they would as separate rooms.

Knocking down the interior walls could be a DIY job, but it’s important that you establish whether the wall is load bearing. If it is then you will need to ask for expert help to find a solution, as knocking down a load bearing wall could have disastrous consequences.

Holly said: “Creating an open-plan living area can increase your value by up to as much as 15% when done well and will almost always encourage potential viewers to make an offer on the property.”

4.      Install additional toilets or bathrooms (5% increase in value, £13K of average house price)

A spare storage room or under-stairs cupboard could be converted into an additional toilet, and you can even add an extra bathroom to a property if you have the room.

This is especially worthwhile for homes with a limited number of existing bathrooms, but you should beware of losing a bedroom. A good option would be to create a small en-suite if you have a large bedroom.

Adding extra bathroom facilities could increase the property value by as much as 5%2 and is especially worthwhile in older houses that may have fewer existing bathrooms.

5.      Create storage solutions out of spare space (up to 5% increase in value, £13K of average house price)

Making the most out of nooks and crannies in your home can really make features stand out, as well as adding value.

Converting under-stairs cupboards or alcoves into storage areas helps to make your living areas more practical, as well as adding value by making your home look more unique and functional.

Holly says: “The value added by storage is difficult to pin down and varies hugely depending on the storage in question. Large scale projects like a wine cellar or basement renovation can add a significant amount to the value, whereas low key storage solutions will increase it by a lower amount.

“However, storage is very appealing to buyers, so even if it does not significantly increase the overall value, it will help to make a property more desirable.”

Vlatka Lake, Marketing Manager at Space Station, said: “Adding value to your property is something that can be easily done by any homeowner, and whatever the size of their budget.

“We hope that these tips can inspire people to make the most of their spare space, helping them to maximise their property value when they come to sell.”

For more information on how you can increase the value of your property, visit: https://www.space-station.co.uk/blog/ten-ways-to-increase-the-value-of-your-property

New Year, New Home? Property trend predictions for 2021

Why ‘urban village’ living is topping the wishlist of prospective homebuyers

Life as we know it changed dramatically in 2020. The way we work, socialise, and unwind has been fundamentally affected by the global pandemic and, in response, it is evident the priorities of prospective homebuyers have been altered significantly.

As we enter the New Year, the property experts at AMA Homes share their top property trends to look out for in 2021 and reveal which of their award-winning luxury developments ticks all the boxes.

Topping the trends in 2021 is the desire for ‘urban village’ living. The ideal urban village location offers residents all the comfort and sense of community that comes from village life, but couples it with the added bonus of having all the amenities of a large city within close proximity.

The rise in popularity of urban village living is, in part, related to the significant increase in professionals working from home. With many now opting to make home-working their permanent choice, the daily commute is no longer a deciding factor in the homebuying process. As a result, urban village living is being added to homebuyers’ wish lists.

Instead, many are succumbing to the appeal of urban village life – a slower paced way of living, a closeness with nature, a connection with neighbours, and a feeling of belonging. Yet all the benefits and convenience of remaining close to the city centre, where theatres, bars, restaurants, and shops are just a short journey away.

Ticking all the boxes of urban village living and therefore fast emerging as a property hotspot is Cramond – a quaint coastal village situated in the north-west of Edinburgh, at the mouth of the River Almond where it enters the Firth of Forth.

A peaceful and picturesque setting, Cramond offers residents an idyllic outdoor lifestyle less than 20 minutes from the capital.

It is here you will find Caer Amon, an award-winning development of luxury apartments from AMA Homes. The 32 ultra high-spec apartments are set within a series of gardens and landscaped courtyards. The exterior white walls sympathetically echo the whitewashed cottages at Cramond harbour, whilst the interiors have an unmistakably contemporary light and spacious feel. They benefit from zoned underfloor heating and excellent insulation, making them highly energy efficient.

The development was designed by Richard Murphy Architects, a world-renowned practice that has 20 RIBA awards to its name. From the very first Maggie Centre in Edinburgh, which was nominated for the 1997 Stirling Prize, to his own home on Hart Street, which won the RIBA House of the Year in 2016, Richard Murphy has created ground-breaking, innovative buildings, and Caer Amon is no exception.

28 properties at Caer Amon have already sold but house-hunters will be pleased to hear two apartments at Caer Amon have just been re-released; 30/11 Brighouse Park Cross – available now at the fixed price of £820,000, and 29/5 Brighouse Park Cross – available now at a fixed price of £500,000.

Commenting on the rise in popularity of the urban village lifestyle, AMA Homes Director, Behnam Afshar, said; ‘What we are witnessing is a major shift in the housing market which is directly related to wider changes in peoples’ lifestyles.

‘Urban village living offers the best of both worlds and nowhere is this better encapsulated than at Caer Amon – a peaceful neighbourhood in a stunning coastal location, a mere five miles from all that the Scottish capital has to offer.’

According to Behnam, the fast-paced property market shows no sign of easing up as we enter the New Year, therefore homebuyers interested in finding out more about urban village life at Caer Amon are advised to book a viewing in the first instance, strictly by appointment only.

2020 may have been an unpredictable year, with many homebuyers questioning their priorities, but it is clear from the performance of the property market that urban village living will continue to provide the ideal answer for many in 2021 and beyond.