Tag: Walker Fraser Steele

Annual Scottish house price growth at 6.2%

  • Competition for high-value homes persisting
  • 31 of 32 Local Authority Areas continue to see price increases over last twelve months
  • Average Scottish house price now at £218,992, up 0.5% on February, up 6.2% annually

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

Scott Jack, Regional Development Director at Walker Fraser Steele, comments: “Our data this month shows Scottish house prices continue to edge upwards. Modestly positive increases across the board continue to be the trend.

“The average house price in Scotland has increased by some £12,700 – or 6.2% – over the last twelve months, to the end of March. The average price paid, £218,992, sets another record and is the seventh time that this has happened in the last twelve months.

“On a monthly basis, prices in March 2022 rose by 0.5%, or close to £1,120. This monthly increase is lower than the revised 1.2% recorded in February, but surpasses the 0.1% that was seen in December 2021, three months earlier.

“It appears that the lack of good stock coming onto the market continues to support prices. This is in the face of some significant cost-of-living challenges too. We cannot know what that means for future performance, but we do know that high inflation makes property an attractive asset for investors when other assets do not offer such great returns. While you might think the future is uncertain, regional markets will perform differently for very specific reasons (think Aberdeen and oil) driving national averages.

“In our data, 31 of the 32 local authority areas in Scotland saw their average prices rise over the previous twelve months, one more than in February. On a monthly basis, on the mainland, the largest increase in prices was in Argyll and Bute, where values rose across all property types except for flats.”

Commentary: John Tindale, Acadata Senior Housing Analyst

The March housing market

The average price paid for a house in Scotland in March 2022 was £218,992, setting yet another record price for the country – the seventh occasion that this has happened in the last twelve months.

This price is some £12,700 higher than that seen in March 2021, meaning that prices have risen by 6.2% on an annual basis. This increase is 1.6% lower than the revised 7.8% seen in February 2022, and is in fact the lowest annual rate recorded since November 2020 – some 16 months earlier.

On a monthly basis, prices in March 2022 rose by 0.5%, or close to £1,120. Again, this monthly increase is lower than the revised 1.2% recorded in February, but surpasses the 0.1% that was seen in December 2021, three months earlier.

The housing market growth rates would therefore appear to be slowing in March, although as Figure 1 below shows, house prices are continuing to climb, with the slowdown in rates being almost imperceptible. It should also be borne in mind that house prices in March 2021 had an upward blip, (see Figure 1), being one month ahead of the termination of the LBTT tax holiday in Scotland on 1st April 2021.

The ending of the tax holiday in April 2021 prompted an increase in the number of transactions that took place in March 2021 (Figure 2 below), as well as an increase in the number of high-value properties sold in the month (Table 2 below).

This followed as buyers brought forward their actual purchases into March 2021 – or even earlier – to take advantage of the tax savings available. It can therefore be concluded that the cause of the slowdown in annual rates in March 2022 is due to the higher-than-normal values that were current in March 2021, distorting the annual comparison.

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

Looking at the England and Wales housing markets, we find that all regions showed an average increase of +2.3% in house price growth in March 2022, compared to Scotland’s fall of -1.6%. However, also relevant is the fact that the ending of the equivalent LBTT stamp duty tax holiday in Wales didn’t occur until June 2021, whilst in England the tax holiday continued up to the end of September 2021.

England and Wales did not therefore experience the same upward movement in prices in March 2021, as was seen in Scotland, and hence comparisons in March 2022 across the three countries can be misleading.

We anticipate, other things being equal, that annual rates of house price growth in Scotland will bounce back in April 2022, as the effect of the March 2021 blip begins to decline.

Transactions analysis

Figure 2 below shows the monthly transaction count for purchases during the period January 2015 to March 2022, based on RoS (Registers of Scotland) figures for the Date of Entry. (March 2022 figures are based on RoS Application dates.) The graph shows that sales volumes generally pick up in March of each year, especially when compared to February, which is generally the quietest month of the year for house sales.

The March 2021 transaction total, at 12,237 sales, is the highest of the eight years shown, for the reasons discussed on page 3 i.e. they were LBTT-related. The second-highest March occurred in 2016, with 11,017 sales. This occurred as the result of a pre-announced 3% additional charge to be added to the LBTT – on second homes and buy-to-let properties – which came into force on 1st April 2016.

If we remove the pandemic-related years 2020 – 2022 from the calculations, then the average number of sales in March for the seven years 2013 – 2019 amounts to 8,241 transactions, compared to August, which has the maximum number of sales of any month at an average 9,368 transactions. The March 2022 transaction total of 8,046 sales is therefore close to average, although it is based on RoS Application Dates, as opposed to the Date of Entry, which we use for all our transaction counts, except for the latest month.

Looking at the first three months of each year, then 2022 is currently the fourth highest of the eight years charted.

Figure 2. The number of sales per month recorded by RoS based on entry date (RoS applications date for March

Scotland transactions of £750k or higher

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

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 43 sales in excess of £750k during March 2022, and we anticipate that this number will increase as further sales for the month are processed by the Registers of Scotland. However, it is extremely unlikely that the March 2022 total will exceed that of March 2021, as the latter total of 115 sales was enhanced due to it being the final month in which purchasers could take advantage of the LBTT tax holiday, which came into existence on 15th July 2020.

The total for March 2015 was also exaggerated, as it was the final month before Scotland’s LBTT tax scheme started, at rates higher than the SDLT charges (for high-value properties) which had previously applied to the whole of the UK.

If we exclude these two exceptional events, then the total number of high-value sales during the first three months of 2022 is the highest of the last eight years. This is an indication that the “lifestyle changes” associated with the pandemic arising from “working from home” and the “need for space” are still strong features of the current housing market. This in turn has resulted in strong competition for the properties that meet these requirements, with substantial price rises being seen at the top end of the market.

The six authorities with the largest number of the 194 high-value sales that have been recorded to date in 2022 are: Edinburgh (94); Glasgow City (14); Fife (14); East Renfrewshire (10); East Lothian (9); and finally East Dunbartonshire (7).

Local Authority Analysis

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

Table 3 above shows the average house price and percentage change (over the last month and year) by Local Authority Area for March 2021, as well as for February and March 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 March 2022. Local Authority areas shaded in blue experienced record average house prices in March 2022.

Annual change

The average house price in Scotland has increased by some £12,700 – or 6.2% – over the last twelve months, to the end of March. This is a £3,100 decrease over the revised £15,800 growth in prices seen in the twelve months to the end of February 2022.

In March 2022, 31 of the 32 local authority areas in Scotland saw their average prices rise over the previous twelve months, one more than in February. The one area experiencing a price fall in March was Aberdeen City, down by 2.9% over the year. 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, as we suggested last month, there is a strong correlation between house prices and the price of crude oil: we are hence anticipating that property values will begin to increase relatively soon, following the recent dramatic rise in the price of oil.

The area with the highest annual increase in average house prices in March 2022 was Fife, where values have risen by 15.9% over the year. The average price paid for a property in Fife in March 2022 has been elevated by the sale of an apartment at the Hamilton Grand complex for £2 million. This is the sixth apartment at the Hamilton Grand to be sold in the last twelve months. One of the many features of the Hamilton Grand is that it overlooks the final hole of the Old Course at St Andrews – which must be one of the best places in the world to live if you are a golf fan.

Monthly change

In March 2022, Scotland’s average house price in the month rose by some £1,125, or 0.5%, which is less than half of the £2,500 increase seen in February. The average price of a home in Scotland now stands at £218,992, which sets a new record level for the nation for the seventh time in the last twelve months.

In March 2022, 18 of the 32 Local Authority areas in Scotland experienced rising prices in the month, three fewer than one month earlier. The largest increase in average prices in March – of 8.2% – was in the Shetland Islands, where the average price of detached homes increased from £170k in February to £205k in March.

On the mainland, the largest increase in prices was in Argyll and Bute, where values rose across all property types except for flats. Perhaps the most interesting sale in Argyll and Bute in March was Tervine House, a five-bedroom detached home, located in Kilchrenan, with its own private jetty and fishing rights to Loch Awe. To reach Kilchrenan, it is necessary to drive down a seven-mile-long minor road, which comes to its end in the village. The property was originally put on the market for £575k but sold for £802k, being indicative of the strong competition that exists for homes that match the pandemic “lifestyle change” needs, of wide-open spaces in scenic locations.

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 March there are 13 such authorities, five fewer than in February. We can also add that Scotland itself has set a record average price in March 2022 – the third of the year.

Heat Map

The heat map below shows the rate of house price growth for the 12 months ending March 2022. 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 area with negative growth is Aberdeen City, where prices over the year have fallen by -2.9%. The highest increase over the twelve months to March 2022 was in Fife at 15.9%, followed by Argyll and Bute at 15.3%.

Comparisons with Scotland

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

Scotland’s Seven Cities

Figure 5. Average house prices for Scotland’s seven cities from January 2021–March 2022

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

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

Walker Fraser Steele: Scottish House Price growth picks up in January

  • Scotland’s monthly rate of 1.2% is highest since August
  • Fife sees £4 million sale
  • Shortage of housing stock continues to support prices
  • Average Scottish house price now at £215,388, monthly rise of 1.2%, 7.6% up annually

Scott Jack, Regional Development Director at Walker Fraser Steele, comments:

“Our report this month shows that the average house price in Scotland has increased by some £15,200 – or 7.6% – over the last twelve months, to the end of January this year. This is an £800 increase over the revised £14,400 growth in prices we witnessed to the end of December last year. Of equal significance is the fact that this heralds a reverse to the slide in the annual rate which had started over the previous three months. While the growth rate here in Scotland trails that of Wales by 1.4%, it is still higher than the average 7.3% in England and Wales overall. The Scottish market is continuing to perform well.

“What we are seeing in this return to growth is that people are still living, moving, buying and selling in the aftermath of the pandemic and the “lifestyle” changes it brought about. Working from Home has encouraged many homebuyers to move to larger premises which can accommodate a different way of living and working. Many have been in search of more outdoor space too – the so-called “Race for Space”. The issue here is that while there is a high demand for such homes, the supply is limited, so there continues to be strong competition for the properties that do come onto the market, with robust price increases as a result.”

Commentary: John Tindale, Acadata Senior Housing Analyst

The January housing market In January 2022, the annual rate of house price growth increased to 7.6%, from 7.3% in December 2021. This represents an increase of £15,200 over the average price of a property at the end of January 2021. The increase in the growth rate brings about a halt to the downturn in rates observed over the previous three months.

Over the last 12 months, there are six Local Authority Areas which between them have accounted for just under 50% of the £15,200 increase in the average price, on a weight-adjusted basis. (A weight adjusted basis takes into account both the change in the authority’s own average price as well as the number of sales involved.) The six areas are – in order of prominence – Fife, the City of Edinburgh, Glasgow City, South Lanarkshire, Highland and West Lothian.

On a monthly basis, prices in January 2022 rose by 1.2%, or £2,572, with Scotland’s average house price now standing at £215,388. This is the highest increase in a month since August 2021, and sets a further record average price for Scotland – providing an additional indication of the general upward pressure on prices.

Figure 1. The annual rate of house price growth in Scotland over the period January 2020 to January 2022 with trendline

So what is causing the ongoing upward movement in prices? 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 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.

Last month we showed that the highest rise in property prices over the last ten years had taken place during the pandemic, with the Lothians being the top three authorities in terms of price growth. We suggested this was due to many purchasers looking for a home with plenty of space outside of Edinburgh 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 January 2022, based on RoS (Registers of Scotland) figures for the Date of Entry. (January 2022 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 13,055 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. It also benefitted from the LBTT tax reductions available from 15 July 2020 to 31 March 2021 (inclusive).

Noteworthy as well 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 December 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 10%. 2021 had the highest number of transactions in a year since 2007

Figure 2. The number of sales per month recorded by RoS based on entry date (RoS applications date for January 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 – January 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 54 sales in excess of £750k during January 2022, and we anticipate that this number will increase as further sales for the month are processed by the Registers of Scotland.

In 2021, total sales in excess of, or equal to, £750k amounted to 1,097 in number – and we expect this total to reach 1,100 as RoS continues to process late registrations for the year. This is the largest number of high-value sales that we have recorded in a year.

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. During the pandemic the nation was instructed to “work from home”, which established an appetite for larger properties with areas which could be used as offices and ideally with outdoor facilities – the “race for space”. Home movers and office workers were thus encouraged to look for premises which better suited their updated needs.

The process of moving home was additionally assisted by the existence of 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, which encouraged the whole market to be more adventurous in its outlook.

However, the peak of the “pandemic market” appears to have occurred in September 2021 (see Figures 1 and 2). As a result, it can be seen that in each month subsequent to that date, the number of homes purchased with a value of £750k or above, has been less than that recorded in the same month of the previous year.

Local Authority Analysis

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

Table 3 above shows the average house price and percentage change (over the last month and year) by Local Authority Area for January 2021, as well as for December 2021 and January 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 January 2022. Local Authority areas shaded in blue experienced record average house prices in January.

Annual change

The average house price in Scotland has increased by some £15,200 – or 7.6% – over the last twelve months, to the end of January. This is an £800 increase over the revised £14,400 growth in prices seen to the end of December 2021, but importantly stops the slide in the annual rate which had been evident over the previous three months. Scotland’s growth rate now trails the Wales rate of 9.0% by 1.4%, but in percentage terms is still higher than the average 7.3% in England and Wales overall.

In January 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 East Renfrewshire and Aberdeen City. In East Renfrewshire, prices of detached homes have fallen from an average £440k in January 2021 to £415k in January 2022. 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 properties purchased in January 2021, but none in January 2022. As we reported last month, this is symptomatic of a general reduction in the purchase of high-value homes in Scotland during the final quarter of 2021, which is now extending into the first month of 2022.

In Aberdeen City the average price of flats has fallen by £5k over the last twelve months. However, in Aberdeen, there is a strong correlation between house prices and the price of crude oil, so we anticipate that property values will begin to increase following the recent dramatic rise in oil prices.

The area with the highest annual increase in average house prices in January 2022 was the Orkney Islands, where values have risen by 19.6% over the year. On the mainland, the highest rise in prices occurred in Fife, where average prices rose by 14.8%. Sales in the month included a magnificent apartment in the Hamilton Grand, overlooking the final hole of the Old St Andrews Golf Course, which changed hands for a reported £4 million. If you are an avid golf fan there is probably no better place in the world to live.

Monthly change

In January 2022, Scotland’s average house price in the month rose by some £2,500, or 1.2%, which is the highest increase of the last five months. The average price of a home in Scotland now stands at £215,388, which sets a new record level for the nation for the eighth time in the last twelve months.

In January, 21 Local Authority areas in Scotland experienced rising prices in the month, compared to 19 in December. The largest increase in average prices in January, of 5.6%, was in Na h-Eileanan Siar. 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 (in this case 18).

On the mainland, West Lothian saw the largest increase in prices in the month, of 4.4%. All property types saw an increase in prices in West Lothian, with the largest contribution to the increase coming from detached homes. The increase in the average price of detached homes was helped this month by the purchase of a resplendent four-bedroom property for £835k, located in Westfield, Bathgate, some fifteen miles to the west of Edinburgh. As mentioned earlier, the Lothians tick all the boxes in terms of ‘pandemic living’, with plenty of space, large properties and a relatively easy commute, if required, into Edinburgh.

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 January there are 15 such authorities, one more than in December. We can also add that Scotland itself has set a new record average price in January 2022 – the first of the year.

Heat Map

The heat map below shows the rate of house price growth for the 12 months ending January 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 East Renfrewshire and Aberdeen City, where prices over the year have fallen by -2.5% and -1.4% respectively. The highest increase over the twelve months to January 2022 was in the Orkney Islands at 19.6%, followed by the Shetland Islands at 16.6% – on the mainland it was Fife that was top with price growth of 14.8%.

Comparisons with Scotland

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

Scotland’s Seven Cities

Figure 5. Average house prices for Scotland’s seven cities from November 2020–January 202

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

ENDS

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.

Sales over £750k likely to be double those in 2018

Scottish House Price Index from Walker Fraser Steele

  • Average house price in Scotland grows by 9.3% over last 12 months
  • transactions up by 11% on 2019 levels
  • Average house price up 0.2 in November, now stands at £213, 109
  • 31 of 32 Local Authorities continue to see rising average prices over year to end November

Alan Penman, Business Development Manager at Walker Fraser Steele, comments: “The national growth rate in house prices of 9.3% remains exceptionally high. The ongoing ‘race for space’ continues to support demand for properties that offer the room to live and work in a pandemic environment. Working from home has changed where people want to live and the type of property they want to own.

“The subsequent increase in top-end sales last year has been a result of home movers seeking out properties better suited to their updated needs. Additional support was provided through the tax savings from the Land and Buildings Transaction Tax holiday that was available up to the end of March 2021.

“This encouraged the whole market to be more adventurous. Even now, competition among purchasers, a lack of suitable stock, and the continued very low interest rates supporting affordable mortgage debt means that there is currently plenty of good headwind to sustain prices.

“So while rates of growth in house prices may be stabilising in Scotland, the housing market in November still saw an increase in the average house price of £484, which is 0.2% higher than in October.

“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, but in summary it is fair to say Scottish house prices have enjoyed another strong year often outperforming the UK average.”

Commentary: John Tindale, Acadata Senior Housing Analyst:

“The November housing market Last month we indicated that Scotland’s rate of house price growth was starting to slow, as the annual rate reduced from 13.1% in September to a (revised) rate of 11.5% in October. This month (November), the rate of annual growth continues to reduce – to 9.3% – which represents a modest quickening in the rate of decline from October.

“We would point out, however, that a national growth rate in house prices of 9.3% is exceptionally high, and does not occur particularly frequently. For example, in the 166 months since January 2008, the national growth rate in house prices in Scotland has only exceeded a rate of 9.3% on 10 occasions, with 7 of those occurring during the pandemic in 2021. Historic records would therefore tend to suggest that price growth will slow.

“However, demand for properties with more space remains high. Rightmove reported that on Boxing Day 2021, property searches on their website set new record levels, with Glasgow featuring as the fifth most searched-for location in 2021, while Edinburgh stood in ninth position.

“Competition among prospective buyers for properties remains strong, which is helping to maintain current asking prices. In addition, interest rates remain low on a historic perspective, even if the Bank of England has been dropping hints that rates are likely to move up in the near future.

“In Scotland’s housing market in November, there has been an increase in the average house price of £484 in the month, which is 0.2% higher than in October. The reason for the fall in the annual rate of price growth this month arises from the strong performance in the market twelve months previously, when prices rose in the month of November 2020 by 2.3% – an increase of only 0.2% in November 2021 hence pales into insignificance by comparison.

Figure 1 below shows the movement in annual growth rates over the last 2 years. Although the trendline has a downward track over the final three months of the graph, it ends at a higher level than is currently seen. The answer to the question concerning the direction of travel in house prices in Scotland consequently remains too evenly balanced for a definitive conclusion to be reached.

Transactions analysis

Monthly transaction counts

Figure 2 below shows the monthly transaction count for purchases during the period January 2015 to November 2021, based on RoS (Registers of Scotland) figures for the Date of Entry. (November 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 13,022 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 lost transactions during the spring and early summer months, and also took advantage of the LBTT tax reductions which were on offer 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 14% fall in the overall size of the market. However, looking at the number of transactions for the first eleven 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 totals.

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 977 sales in excess of £750k during the first eleven months of 2021, and we anticipate there will be at least 23 additional sales in November 2021, not yet recorded by the Registers of Scotland and hence not included in the above total. Sales of high-value properties to the end of November 2021 will therefore likely reach 1,000 in number by the end of the month and approach 1,100 by the end of the year. Hence annual transactions of £750k or higher in 2021 will likely double those seen in 2018.

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 23 as yet unrecorded sales being taken into account, November 2021 becomes the second month in a row in which the number of homes purchased having a value of £750k or higher will be lower than that recorded in the same month of the previous year.

Annual change

The average house price in Scotland has increased by some £18,000 – or 9.3% – over the last twelve months, to the end of November. This is a reduction from the £21,800 growth seen to the end of October 2021, and is the second 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 November, Scotland’s growth rate trails Wales’ 9.4% by 0.1%, but in percentage terms is still higher than the nine GOR regions in England.

In November 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 Na hEileanan Siar – but low transaction counts on the Islands often cause unexpected results due to the volatility in the price of the small number of sales – there were just 25 transactions in Na h-Eileanan Siar in November, compared to over 700 in both Edinburgh and Glasgow.

The area with the highest annual increase in average house prices in November was Argyll and Bute, where average prices have risen by 17.8% over the year and by 4.6% in the month. Statistics for the month include the sale of the Ferry Inn House on the Rosneath Peninsula.

The Ferry Inn House was once owned by Princess Louise, the daughter of Queen Victoria. It sold for just under £1 million. The data for Argyll and Bute in November also includes the sale of a further £1 million detached property on the outskirts of Oban, with 11 bedrooms, 5 bathrooms and 17 acres of land.

With these two properties having been sold in the month, it is little wonder that average prices in the area have seen such rapid escalation.

Monthly change

In November 2021, Scotland’s average house price in the month rose by some £500, or 0.2%, compared to a fall of £70 in October. The average price of a home in Scotland now stands at £213,109, which sets a new record level for the nation for the eighth time in the last twelve months.

In November, 20 Local Authority areas in Scotland experienced rising prices in the month, with only 12 seeing prices decline. The largest increase in average prices in November, of 10.2%, was in the Shetland Islands, followed by the Orkney Islands at 7.0%, but as indicated above, Scotland’s Island groups tend to see volatile price movements, due to the low number of sales each month.

On the mainland, Inverclyde saw the largest increase in prices in the month, of 4.6%. This increase in average price was helped this month by the sale of a modern detached home, overlooking the Firth of Clyde, in Gourock, for £650k.

On a weight-adjusted basis, which takes into account both the increase in average price and the number of transactions involved, six local authority areas in November were responsible for 54% of the positive movement in Scotland’s average house price. These were, in order of influence, South Lanarkshire, Argyll and Bute, Perth and Kinross, Highland, Falkirk and Moray. At the opposite end of the scale three authorities were responsible for 60% of the fall in prices in the month, being the City of Edinburgh, East Renfrewshire and East Lothian, with the overall rise in prices outweighing the falls by £484.

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 November there are 14 such authorities, up from 12 in October. In October, it was noticeable in Table 3 that four of the top six local authority areas ranked by price had reached new record levels: however, in November almost the opposite applies, with only one of the top six areas by value having established a new record price. Prices in the other five areas all fell in the month, with semi-detached homes in these areas tending to see the largest falls in average values.

Heat Map

The heat map below shows the rate of house price growth for the 12 months ending November 2021. As reported above, all but one of the 32 local authority areas in Scotland are reporting an increase in their housing values over the last year. The one area with negative growth is Na h-Eileanan Siar, where prices over the year have fallen by -4.6%. The highest increase over the twelve months to November 2021 was in Argyll and Bute at 17.8% with near neighbour East Dunbartonshire being in second place at 16.3%.

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

House prices rise by 13.2% to record high in Scotland

✓ 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  

Produced by Acadata on behalf of  

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. 

Scottish house prices reach new record high

  • Average house prices in Scotland reach new high of £211,029
  • All 32 local authority areas have seen prices rise over the year
  • Transaction levels in August at seven-year high
  • Monthly average increase is 1.8% (August), average annual increase is 12.1%

Alan Penman, Business Development Manager at Walker Fraser Steele, comments: “At the end of July, the average Scottish house price stood at £207,344 but by the end of August this figure was £211,029 – reaching a new record high, with a rise of £3,685, or just under 2% in the month. The race for space continues to support the prices of larger properties. The scarcity of this type of stock coupled with the continued high demand means prices remain strong.

“Property at the top-end has performed well throughout 2021 and there is no sign of any imminent let-up. We noted last month that the exceptional performance of larger properties was likely to continue and this month we have more evidence to support that view.

“People’s preference for more space and working from home has meant buyers have often sought properties that can accommodate new lifestyles. But we should remember that borrowers’ ability to afford these properties has in no small way been a result of the Land and Buildings Transaction Tax holiday earlier in the year, and the continued record low interest rates.

“In terms of the geographical performance of the Scottish regions, the area with the highest annual increase in average house prices in August was the Scottish Borders, where average prices have risen by 28.4%, which again reflects the fact that the mix of homes that have been sold in this area has trended towards the more expensive end of the market.”

Average House Prices in Scotland for period August 2020 to August 2021

Commentary: John Tindale, Acadata Senior Housing Analyst

The August housing market

Scotland’s average house price at the end of August stood at £211,029, which set a further record, having risen by some £3,685, or 1.8%, in the month. The 1.8% growth rate represents a slight softening from the six-year high of 2.7% seen in July.

As we reported last month, one of the main reasons for the current upward movement in prices is a result of the lifestyle changes associated with “working from home”, which has brought about a shift in housing preferences to larger properties, with space for home-working becoming a prime requirement.

The demand for larger premises has continued throughout August, and for some includes moving to Scotland from London, or from other major cities in the UK and beyond. However, the number of larger homes in Scotland available for purchase remains thin, with strong competition for those properties that do come onto the market, helping to keep prices high.

Looking at Figure 1 below – which tracks the average house price in Scotland – 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 and July seeing a return of the higher-value purchases. This was perhaps assisted by those who had decided to move away from buying properties in England, where the threshold on tax savings had reduced to £250,000 at the end of June.

In July and August 2021, we can see that prices once again regained their earlier momentum, with monthly price increases more than matching those experienced during the final quarter of 2020, despite the savings arising from the LBTT tax holiday no longer being available.

Transactions analysis

Monthly transaction counts

Figure 2 below shows the monthly transaction count for purchases during the period January 2015 to August 2021, based on RoS (Registers of Scotland) figures for the Date of Entry (Applications Date for August 2021). 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 and August 2021 the number of properties sold once again appears to be higher than the same months in the previous six years.

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 12%, although this does include the spike in March 2021, which will have enhanced the 2021 figures.

Scotland transactions of £750k or higher

The above table 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.

The table shows that there have been 648 sales in excess of £750k during the first eight months of 2021. By coincidence this happens to be the same number of sales over £750k that took place in the whole of 2020, i.e. in 2021 the same total as in 2020 has been reached after just eight months. It can also be noted that the 2020 total was the highest number of sales of properties in excess of £750k of the previous six years.

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 move to 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, up to the end of March 2021. This encouraged the whole market to be more adventurous in its outlook.

As reported last month, we should also point out that one tends to get more “bang for one’s buck” in Scotland than in England. For example, the recent purchase of a £1 million home in the Scottish Borders included 5 bedrooms, 2.8 acres of garden grounds and 5 acres of grazing paddock. In London £1 million will, in some boroughs, enable you to purchase a three bedroomed Victorian terrace, with minimal garden space. It is therefore little wonder that some Londoners are looking to move to Scotland, if the workplace allows.

Local Authority Analysis

Annual change

The average house price in Scotland has increased by some £22,850 – or 12.1% – over the last twelve months, to the end of August. This is 1.4% higher than the 10.7% recorded one month earlier, and is the highest rate seen since March 2016, that date being just ahead of the introduction of the LBTT Additional Dwellings Supplement of 3% – which was introduced on the purchase of buy-to-let properties and second homes in Scotland (a rate which was subsequently increased to 4% on 25 January 2019).

This increase in the rate of annual growth in house prices comes as something of a surprise – we had assumed that since the ending of the LBTT holiday in March 2021 prices would begin to fall gently. However, it would appear that the shift in housing preferences for larger properties – with space for home working – rather than commuting to places of work, continues to influence strongly the current housing market.

In August 2021, all 32 of the local authority areas in Scotland have seen their average prices rise over the previous twelve months.

The area with the highest annual increase in average house prices in August was the Scottish Borders, where average prices have risen by 28.4%. This is not to say that each individual property sold in the Scottish Borders over the last year has increased in value by 28.4%, but rather the mix of homes that have been sold in the area has trended towards the more expensive end of the market. For example, in the Scottish Borders over the last three months there have been 12 properties sold with a value in excess of £750k, compared to just 2 such sales during the same three months in 2020.

Monthly change

In August 2021, Scotland’s average house price rose by £3,685, or 1.8%, and now stands at £211,029. This rise is smaller than the £5,530 increase seen in the previous month of July, indicating a softening in the rate of price growth over the summer.

Prices rose in August 2021 in 24 of the 32 Local Authority areas in Scotland, down from the 28 areas which saw prices increase in July. The largest increase in average prices in August, of 5.9%, was in Stirling, although this increase was assisted by the sale of a £2.4 million, nine-bedroom detached home, on the outskirts of Strathblane.

On a weight-adjusted basis, which takes into account both the increase in average price and the number of transactions involved, 5 local authority areas in August were responsible for 52% of the positive movement in Scotland’s average house price. The five areas concerned, in order of influence, were the City of Edinburgh, Glasgow City, Perth and Kinross, Aberdeen City and Stirling.

It is perhaps apposite that Aberdeen City appears in the top five authorities with the highest increase in prices in the month, as increases in oil and gas prices have been particularly newsworthy of late. All property types in Aberdeen City have experienced increases in their average prices in August, with the largest increase being seen in flats, up from an average £115k in July to £121k in August. Overall, the highest average property prices in Aberdeen occurred in March 2015 at £259,125, compared to an average £202,189 this August. At the time of the record prices in Aberdeen, the average price of flats in the city had reached £205k – clearly there is still some way to go before Aberdeen City’s housing market returns to its previous record levels.

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 August there are 16 such authorities, up from 12 in July. It is noticeable in Table 3 that eight of the top ten local authority areas ranked by price have reached new peaks, reinforcing the proposition that the main drivers of the current price increases seen in Scotland are associated with the price competition being experienced at the top-end of the housing market.

We can note that, in August 2021, Scotland’s overall average house price has itself also reached a new record level.

Heat Map

The heat map below shows the rate of house price growth for the 12 months ending August 2021. As reported above, all 32 local authority areas are reporting an increase in their housing values over the last year. The highest increase over the twelve months to August 2021 was in the Scottish Borders at 28.4% and the lowest in the Shetland Islands at 0.7%.

Comparisons with Scotland

Scotland’s Seven Cities

ENDS

Average house price in Scotland reaches new record level

  • Average house prices in Scotland reaches new record level – £207,877
  • July sees largest increase in average price in a month since March 2015, up by £6,000
  • Lack of properties on the market helping to support values
  • 2021 has highest number of sales over £750k of last seven years
  • Includes breakdown of 27 local authorities

Alan Penman, Business Development Manager at Walker Fraser Steele, comments:

“The average house price in Scotland at the end of July stands at £207,877, a new record level, having risen by some £5,950, or 2.9%, in the month. This is the largest increase in a month since March 2015 – just prior to the introduction of the Land and Buildings Transaction Tax in Scotland the following month.

“The average house price has increased by some £20,550 – or 11.0% – over the last twelve months. This is 2.5% higher than the 8.5% recorded one month earlier. The annual rate had been slowing over the previous three months from a high in March 2021 of 11.4%. But it is the continuing strong performance of larger properties that is supporting the current growth.

“Sales volumes, which now appear to be running at the levels seen in 2018, also suggest larger properties are supporting higher average prices. Lower transactions and strong prices at the top-end show that demand is exceeding supply with the focus of the market on higher value transactions supported by continuing record low interest rates.

“Combined with the previous tax savings associated with the LBTT holiday, these factors have encouraged the whole market to focus on larger properties and give cause to believe the exceptional performance of larger properties might continue for some months to come.”

Commentary: John Tindale, Acadata Senior Housing Analyst

The July housing market:

Scotland’s average house price at the end of July stands at £207,877, which sets a new record level, having risen by some £5,950, or 2.9%, in the month. This is the largest increase in a month since March 2015, which was just prior to the introduction of the LBTT in Scotland in April 2015.

One of the main reasons for the current upward movement in prices is a result of the lifestyle changes associated with “working from home”, which has brought about a shift in housing preferences to larger properties – with space for home working – rather than commuting to-and-from one’s place of work.

The demand for larger premises continues to be strong, 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 in Scotland remains thin, with strong competition for those properties that do come onto the market.

Last month we noted that the ending of the LBTT tax holiday in March 2021 made little difference to the high-value end of the housing market, with the number of purchases of £750k plus homes in June 2021 actually exceeding those of March 2021 (see Page 5). We suggested that this was probably due to the level of tax saving being limited to £2,100 in Scotland (compared to a saving of £15,000 in England), which is a relatively small sum in relation to a property costing £750k.

The tax holiday was therefore more likely to influence buyer behaviour at lower price levels, with purchases at £250,000 qualifying for the maximum tax savings. With the number of lower-priced sales falling in July, due to the purchase of such homes having been brought forward into the earlier months of the year, this will have had the effect of raising the average price of the properties that were purchased in the month.

Looking at Figure 1 below – which tracks the average house price in Scotland – 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 and July seeing a return of the higher-value purchases. This was perhaps assisted by those who had decided to move away from buying properties in England, where the threshold on tax savings had reduced to £250,000 at the end of June.

Transactions analysis

Monthly transaction counts

Figure 2 below shows the monthly transaction count for purchases during the period January 2015 to July 2021, based on RoS (Registers of Scotland) figures for the Date of Entry (Applications Date for July 2021). 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 for the period from April 2021 to June 2021 no longer exceed those of previous years, and appear to be roughly on a par with the levels seen in 2018. We will await the “Date of Entry” data for July 2021 before making a comment on this latest month.

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 six 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.

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 537 sales in excess of £750k during the first seven months of 2021. This total is greater than the first seven months of each of the previous six years, beating the 363 transactions seen in 2015 – which had the second highest total to the end of July – by some 174 sales. Clearly the expectation for the whole twelve months of 2021 is that high-value sales will be far in excess of all previous years.

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. But additionally we should mention the record low interest rates, which make the purchase of a top-end property more affordable, as well as the tax savings associated with the LBTT holiday, which encouraged the whole market to be more adventurous in its outlook.

There are perhaps two other features of interest that can be observed in Table 2. The first, also previously mentioned, is that sales of high-value properties in June 2021 exceeded those of March 2021, despite the earlier month having the advantage of the tax holiday. The second is that in every month in 2021 (except March) the number of high-value sales has exceeded those of the same month in the previous six years.

Perhaps while discussing high value homes we should also point out that one tends to get more “bang for one’s buck” in Scotland than in England. For example, the recent purchase of a £1 million home in the Scottish Borders included 5 bedrooms, 2.8 acres of garden grounds and 5 acres of grazing paddock. In London £1 million will, in some boroughs, enable you to purchase a three bedroomed Victorian terrace, with minimal garden space. It is therefore little wonder that some Londoners are looking to move to Scotland, if the workplace allows.

Local Authority Analysis

Annual change

The average house price in Scotland has increased by some £20,550 – or 11.0% – over the last twelve months, to the end of July. This is 2.5% higher than the 8.5% recorded one month earlier, and comes as something of a surprise, given that the annual rate had been slowing over the previous three months from a high in March 2021 of 11.4%. We had assumed that since the ending of the LBTT holiday in March 2021 prices would begin to fall gently, but it would appear that the shift in housing preferences for larger properties – with space for home working – rather than commuting to places of work, continues to affect the current housing market.

In July 2021, all bar one of the 32 local authorities in Scotland have seen their average prices rise over the previous twelve months – the one authority not to have done so being Na h-Eileanan Siar, where only 25 sales took place in July 2020. The Scottish government were discouraging house buyers from visiting the Islands during the early stages of the pandemic – so average prices on the Islands were subject to dramatic change, due to the low numbers of transactions involved.

On the mainland, the highest annual July increase in prices occurred in the Scottish Borders, up by 23.2%. In the Scottish Borders, all property types have seen prices rise over the last year, with the largest increase being in detached homes, up from an average £285k in July 2020 to £370k one year later. The rise in average prices in July 2021 has been helped by the sale of six properties in excess of £750k, compared to 11 such properties being sold during the whole of 2020.

Monthly change

In July 2021, Scotland’s average house price rose by some £5,950, or 2.9%, and now stands at £207,877. This rise is the largest gain in a single month since the £15,316 increase seen in March 2015, immediately prior to the introduction of the Land and Buildings Transaction Tax (LBTT), which came into force in Scotland on 1 April 2015.

Prices rose in July 2021 in 28 of the 32 Local Authority areas in Scotland, indicating a near universal increase in prices across the country. The largest increase in July, of 9.9%, was seen in the Orkney Islands – but this was a reflection of the small number of transactions that took place on the Islands, with low sales volumes (32 in July) often being associated with high percentage changes in average prices.

On a weight-adjusted basis, which takes into account both the increase in average price and the number of transactions involved, 5 local authority areas in July were responsible for 52% of the positive movement in Scotland’s average house price. The five areas concerned, in order of influence, were Glasgow City, the City of Edinburgh, North Lanarkshire, East Lothian and South Lanarkshire.

Some analysts have been suggesting that, in the pandemic, it is isolated rural areas that have benefitted most from the lifestyle changes associated with the move to “work from home”. However, looking at the five authorities identified as having the most influence on the price change in July, one would not necessarily draw this conclusion. It would appear that the two largest cities in Scotland are responsible for the movement of over half the change in average house prices, either in their own right, or through their influence over their major commuting hinterlands.

Meanwhile, the Highland local authority area, which one might assume is mostly rural by disposition and should therefore be attracting new residents, has seen its average house price fall by -0.5% in July. As we reported last month, all property types in the Highland area have seen prices fall, with the price of terraces dropping from £155k in June to £134k in July. There has also been a decline in the number of detached properties sold in the month. For example, in the Highland area in March 2021 there were 171 detached properties sold in the month, contrasting with 84 detached homes being sold there in July.

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 July there are 12 such authorities, up from 4 local authorities in June, as well as Scotland’s own average price, which has also reached a new record level.

Heat Map

The heat map below shows the rate of house price growth for the 12 months ending July 2021. All bar one of the 32 local authority areas are reporting an increase in their housing values over the last year, the exception being Na h-Eileanan Siar.

Comparisons with Scotland