✓ 30 of the 32 local authority areas continue to see prices rise over the year
✓ Monthly growth rates are softening
✓ Top 5 local authority areas by value all set new record average price levels
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Alan Penman, Business Development Manager at Walker Fraser Steele, comments: “At the end of August we reported that the average Scottish house price stood at £211,029 – at that point a new record high.
“This September we have seen the upward momentum continue. Scotland’s average house price at the end of September stands at £212,832, which sets yet another record, having risen by some £2,200 – or 1.0% – in the month.
“Five local authority areas in September were responsible for 58% of the positive movement in Scotland’s average house price. The five areas concerned, in order of influence, were South Lanarkshire, the City of Edinburgh, Glasgow City, East Dunbartonshire and Highland.
“More generally prices rose in 19 of the 32 Local Authority areas in Scotland. The largest increase in average prices, of 6.3%, was in Inverclyde. In second place on the mainland was East Dunbartonshire, with an increase in prices of 5.2%.
“There were plenty of high-value sales in East Dunbartonshire, with a number of detached sales taking place in Bearsden – located approximately six miles to the North West of Glasgow – the most expensive being on the Roman Road, priced at £1.3 million.
“This underlines how property at the top-end continues to underpin this growth as people opt for more space and continue to embrace working from home. September often provides momentum to the market too as it is not untypical for families to reassess their needs as the new school year gets underway.”
Commentary: John Tindale, Acadata Senior Housing Analyst
The September housing market
Scotland’s average house price at the end of September stood at £212,832, which sets yet another record, having risen by some £2,200 – or 1.0% – in the month. The 1.0% growth rate represents a slight softening from the 1.7% seen in August.
On an annual basis, average house prices have increased by close to £25,000 – or 13.2% – over the last twelve months. This is the highest rate of all four nations, and nine regions in the United Kingdom.
It doesn’t come as too much of a surprise to learn that house prices rose in September. Looking at the last seventeen years, house prices in Scotland have increased on thirteen occasions in September. Estate Agents frequently mention that housing activity picks up towards the end of the school holidays, as families potentially reassess their housing needs at the start of the new school year.
In addition, this year we also have the added impetus of the lifestyle changes associated with the pandemic and “working from home”, which has brought about a shift in housing preferences for larger properties, with space for home-working becoming a prime requirement.
The demand for larger premises has continued throughout September, and for some includes moving to Scotland from London, or from other major cities in the UK and beyond. However, the supply of larger homes coming to the market currently remains relatively low, which results in strong competition for those properties that do become available, hence keeping prices high.
We can see that prices reached a mini-peak in March 2021, immediately prior to the ending of the LBTT tax holiday on 1 April 2021. Average prices then started to fall, as buyers of high-value properties reduced in number (see Table 2). However, the reduction in high-value sales only continued through April and May, with June, July and August seeing a return of the higher-value transactions.
In July, August and September 2021, we can see that prices once again regained their earlier momentum seen during the second half of 2020, despite the savings arising from the LBTT tax holiday no longer being available.
Figure 1. The average house price in Scotland, for the period September 2019 to September 2021
Transactions analysis
Monthly transaction counts
The fall in the number of transactions for the period March 2020 to August 2020 is clearly visible. However, what is also clearly demonstrated is that the number of sales for each month from September 2020 to March 2021 has surpassed that of the same month in the previous six years.
In addition, the spike in sales that took place in March 2021 – as the tax holiday expiry date approached – is plain, although this total was exceeded by the volume of sales in October and November 2020, when monthly sales during the pandemic reached their peak.
Also clear is the fall in sales in April 2021, to levels below those in all previous years except for 2016 and 2020, indicating the extent to which buyers had managed to bring forward their purchases into March 2021 to take advantage of the tax holiday.
For the record, the peak in sales in March 2016 was also tax-related, and came one month ahead of the introduction of the then 3% LBTT surcharge (now 4%) on second homes and buy-to-let properties, which tax was pre-announced to commence from April 2016.
Sales volumes in April and May 2021 remained lower than the equivalent months in 2017 and 2019, and appear to have been roughly on a par with the levels seen in 2018. However, in July 2021 the number of properties sold once again appears to have been higher than the same months in the previous six years, although sales in August 2021 returned to 2017 levels.
Comparing total sales in 2020 with those of 2019, there was a 14% fall in the overall size of the market. However, looking at the number of transactions for the first eight months of 2021, and comparing with the same period in 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 figures.
