Sunshine in Scotland may currently be in short supply but if you are paying a mortgage on your property or are one of many young people struggling to get a foot on the property ladder, some of the recent news about mortgage rates may be welcome.
According to MoneyWeek, a dip in inflation in May has raised expectations among lenders of an interest rate cut in the coming months, prompting some like Nationwide to cut one of its 5-year mortgages to 3.99%. The average 5-year deal is currently over 5%. Moreover, Yorkshire Building Society reportedly launched a 99% loan-to-value (LTV) rate earlier this year to appeal to first-time buyers.
However, the same source notes that while some lenders may be starting to reduce their mortgage borrowing rates, it’s highly unlikely the market will see a return any time soon to the days of 1%-2% mortgage lending rates. There may be over 350 deals on the market with a 95% LTV offer, but many people needing to re-mortgage in the coming year and who are currently on low-interest rate mortgages will face significant increases in their monthly mortgage repayments.
Nevertheless, resilience is a descriptor I and many other industry insiders are using to describe Scotland’s property market. Notably, the latest UK House Price Index – Scotland (May 2024) shows that the average price of a property in Scotland was £191,000 – representing a 2.5% annual price rise – and above the UK average house price of 2.2%.
Such a statistic may be encouraging if you are a homeowner with designs to sell in the coming months. However, before you consider putting your home on the market – and instructing Home Report Company – as professional and independent chartered (RICS certified) surveyors to prepare your all-important Home Report – it’s worthwhile looking at some of the key regional variations in property prices.
After all, while every property differs, understanding variations in regional property prices can help you determine if a particular area and property type will be affordable – especially if you will soon need to renew your mortgage.
Regional property prices
A glance at the latest Registers of Scotland UK House Price Index (May 2024) confirms that the City of Edinburgh continues to be the most expensive area in the country to purchase a property, with an average price of £327,751 – an increase of 4.7%. This has been a trend unchanged for many months. At the other end of the scale, Inverclyde continues to offer the greatest affordability as a local authority area, with an average property price of £124,000.
Interestingly, the same source records that 29 of Scotland’s 32 local authority areas have recorded increases in average property prices compared to the same period in 2023. It wasn’t so long ago that I was reporting that 16 local authority areas recorded an increase. Potential property sellers in Stirling – with an average property price increase of 13.3% – may be happy. It may be a small area, but I note too that Clackmannanshire (8.2% rise to £168,000) has enjoyed a healthy rise. However, in Dumfries and Galloway, the converse is true with an annual (May 2023 – May 2024) average property price decrease of 3.4%.
If Edinburgh (and East Lothian) continue to command strong average property prices, the City of Glasgow, with a 6.3% rise to a May 2024 average property price of £176,055 is also welcoming news for those planning to sell. Residents of North Lanarkshire (up 5.4% to £141,170) may also be smiling. Interestingly, the City of Aberdeen – up 1.3% to £134,000 and after a turbulent period – is also enjoying higher average property prices when compared to May 2023.
Time to sell or buy?
It’s hardly news that detached properties in Scotland continue to command the highest average price point, standing at £336,060 (up 3.5%) in May 2024. However, all the key property types, including semi-detached (up 4.8% to £204,573) and flats (up 1% to £134,066) have seen an increase in their average annual property price.
This will be heartening news for property owners, but if you are trying to move from a flat to a more spacious semi-detached or detached property, that move will likely require considerable investment.
Of course, these statistics should be regarded as offering guidance, for even in a particular local authority area – and indeed in neighbourhoods of a city or town – you can find considerable price variations.
Therefore, whether you are in the market to buy or sell, it makes sense to do your homework. If you are selling, a professionally prepared home report will give you a good indication of your property’s state of repair, energy efficiency and potential value on the market – factors that will help you determine your potential budget for a move.