Mixed Picture For Scotland’s Property Buyers and Sellers

The leaves may be turning to signal the coming of autumn but nine months into 2023 and in percentage terms the latest statistical property report from Registers of Scotland: July 2023 indicates little change in the property market.  The average house price of a property in Scotland increased just 0.1% when compared to June 2022 and by 1.1% (non-seasonally adjusted basis) compared to June 2023.  As a result, the average price of a property in Scotland at the end of July 2023 was £192,000.

The big picture

If you have a mortgage, the news on 21 September that the Bank of England was finally bringing a (perhaps temporary) halt to its rise in the base rate (5.25%) will have been welcome.  However, though we have been spared a 15^th consecutive base rate rise, mortgage lending rates remain stubbornly high. A glance at Uswitch indicates that even if you’re lucky enough to only require a Loan-to-Value (LTV) of 60%, a 2-year fixed rate deal is still over 5.4% and a similar 5-year deal over 4.9%.

The cost of borrowing may partly explain why according to the Registers of Scotland, the volume of residential sales in Scotland (May 2023) was down by 9.5% compared to the provisional data for May 2022.

If the cost of borrowing is one key factor for you to consider as a potential property buyer, many of us must also factor in the monthly cost of heating our property.  While new-build homes now benefit from more stringent energy-saving regulations (eg improved insulation), our average monthly energy bills still remain much higher than pre-pandemic levels.  Add the inflationary pressures on fuel and food and it’s clear that whether a property buyer or seller (you will wish to move somewhere) we need to carefully do our sums to ensure our desired property is affordable.

Property prices in Scotland

If you are the owner of a detached property in Scotland, the latest statistics from Registers of Scotland (July 2023) may offer encouraging news. This property type has recorded a 2.5% average increase in price compared to 12 months previously to stand at £345,206. By comparison – and being mindful that prices will vary greatly depending on the location – flats over the same period recorded the lowest annual percentage change, decreasing by 1.5% to an average price of £130,981.  Of course, this slight reduction could be helpful for first-time buyers and keeping in mind that City of Glasgow has an especially high number of flats.

Prices by location

I always find it interesting to note changes in property prices across Scotland’s local authority areas.  Of course, many factors can influence these changes, but I’ve noted that in terms of volume of sales (12 months to May 2023) and annual price change (to July 2023) East Lothian continues to produce robust figures.  For example, average house prices in East Lothian increased by 11.7% in the 12 months to July 2023 to £329,563. While I don’t wish to put too much weight on these statistics, it seems this is a local authority area, easily commutable to the likes of City of Edinburgh, that has now enjoyed positive growth for many months.

By comparison, the latest statistics indicate that almost directly across the Central Belt in West Dunbartonshire, average annual property prices over the 12 months to July 2023 have fallen by -7% to £133,123.  In terms of local authority breakdown, East Ayrshire (£126,346), Inverclyde (£126,653) and North Ayrshire (£127,376) continue to be the most affordable areas to purchase a property based on average property prices over the 12 months to July 2023.

By contrast, and although East Lothian is enjoying a consistent upward trend in its average property prices, it’s the City of Edinburgh local authority area that continues to be the most expensive in Scotland.  Here, average property prices to July 2023 were £333,380 – up 1.4% on 12 months previously. City of Glasgow (up 1.6% to £178,000) and City of Dundee (up 1.3% to £149,000) are cities that have also recorded positive price increases, though the City of Aberdeen is down -6.2% (to £138,110) for the 12-month period to July 2023.

Beyond the cities

Post-pandemic, many employees are being encouraged to work more from their office and the distances and costs associated with a commute are factors potential property buyers will consider.  The popular coastal town of North Berwick in East Lothian is only 25 miles drive from Edinburgh but as I’ve highlighted, it’s a local authority area with high average property prices.

Midlothian (down -2.4% to £225,000), which includes the town of Penicuik is only separated from the M8 corridor by the Pentland Hills and is easily commutable to Edinburgh.   Further south, the Scottish Borders towns, including Peebles continue to hold appeal at just a 45- minute scenic drive (25 mile) commute to Edinburgh. In July 2023 average annual property prices in the Borders were up 2.9% to £202,000. West Lothian is another increasingly popular commutable local authority with its blend of traditional dwellings, new builds, and the chance for semi-rural or town living.  Here, average annual prices are up 3.0% to £210,330.

By contrast, Stirling, which geographically is ideally located for commutes to Edinburgh, Glasgow, Perth and Dundee has recorded a slight drop (-1.4%) to £245,000. Notably, to the south-west of Glasgow, the popular local authority area of East Renfrewshire has also recorded a dip (-3.7%) to £285,795.

Summary

Despite the above, I should emphasise that these statistics should only be considered as guidance.  There can be continual variation in property prices in local authority areas and I suspect that the cost-of living crisis, including energy bills, fuel and mortgage repayment rates will be factors that contribute to a slight softening of prices in many areas of the country.

However, I’ve also often said that every property has its own characteristics and investing in a properly prepared, professional Home Report by a RICS certified chartered surveyor can pay dividends if you plan to sell. As I’ll write in my next blog, October can traditionally be a popular time to buy and sell a property ahead of winter.