House prices in Scotland continue to grow faster than the UK average
Monthly UK House Price Index figures released for June 2019.
Three key figures for June:
- £151,891
The average price of a property in Scotland - 1.3%
The annual price change of a property in Scotland - 0.7%
The monthly price change of a property in Scotland
The latest statistics from the UK House Price Index (HPI) show that the average price of a property in Scotland in June 2019 was £151,891 – an increase of 1.3 per cent on June in the previous year.
Comparing with the previous month, house prices in Scotland rose by 0.7 per cent between May 2019 and June 2019.
The UK average house price was £230,292, which was an increase of 0.9 per cent on June in the previous year and an increase of 0.7 per cent on the previous month.
The volume of residential sales in Scotland in April 2019 was 7,812 – an increase of 6.0 per cent on the original provisional estimate for April 2018. This compares with an increase of 7.9 per cent in England, 5.9 per cent in Wales and a decrease of 1.8 per cent in Northern Ireland (Quarter 2 – 2019).
Commenting on the release, Business Development Director Kenny Crawford said:
Average house prices in Scotland have been growing faster than the UK annual rate since March 2019, and in all but two months since December 2017. The likely cause is the continuing fall of house prices in London, which is reflected in the overall UK figure.
It is worth noting, however, that the average price of a property in London at £466,824 is more than three times that of the average price of a property in Scotland. A detailed, long-term view of the Scottish property market can be found on the Registers of Scotland website. This report is publicly available and includes average price, volume of sales and market value from April 2003.
In Scotland, all property types showed an increase in average prices in June 2019 when compared with the same month in the previous year. Terraced houses showed the biggest increase, rising by 2.0% in the year to June 2019 to £126,953. The smallest increase of all property types was for detached houses, with an increase of 0.1% in the year to June 2019 to £253,901.
Mixed signs for Scottish sales market as Brexit looms | Sales Bulletin Summer 2019
With the UK due to leave the EU on 31st October, there are somewhat contradictory signals on how this is affecting the housing market.
• Positively, Registers of Scotland reported a rise in market activity across much of Scotland in Q2 2019, with market turnover up 6.2% overall. RICS, while downbeat about much of the UK, recorded better market sentiment in Scotland. Rightmove highlighted that properties sell faster in Scotland than other parts of the UK, at under 50 days on average.
• On the downside, more recent transaction data from the HMRC shows a 24% drop in Scottish housing transactions in June 2019 compared with June 2018.
• Since these surveys are measuring indicators in different ways and at different points in time, such divergence is not unusual. HMRC transactions data are also sometimes significantly revised. Nevertheless, the uncertain political and economic situation will be expected to bear down on the housing market as the year progresses if the current Brexit stalemate continues
Spotlight: Scotland Residential
Scotland’s market will outperform the rest of the country, underpinned by a lack of supply, the value gap and economic growth in Edinburgh and Glasgow.
Scotland’s residential market remains unfazed by the political uncertainty currently affecting the rest of the country. The number of transactions increased by 2% at the end of last year, supported by a record-breaking prime market. Meanwhile, the official UK House Price Index for Scotland has seen positive annual growth for the last 33 consecutive months.
Continue reading this article on the Savills.co.uk website.
Scottish Housing Market
Traditionally, home ownership in Scotland has been a lot less compared to the rest of the UK. The country was dominated by the Labour Party providing a ready supply of council houses as opposed to home ownership.
Scotland is in fact a generation or more behind the rest of the UK. It is only in the last generation that families are inheriting from their parents’ wealth created by property ownership. In England it has been so since the end of the Second World War. In other words, despite the high price of houses the Scottish younger generation are taking up the opportunity to get onto the housing ladder but they still have a long way to catch up compared to the rest of the UK. Added to this of course incomes continue to improve and there is now many people looking to property as an investment - a safer bet many would say than a pension.
The picture today is dramatically different as nearly two-thirds of Scots own their own homes, 22% rent social housing and 15% live in private rented homes.
But what of those who want to join this particular party?
About 157,000 households are on council housing waiting lists - down 22% from 2008 - but the full picture is incomplete as the available data does not cover all local authority areas.
Elsewhere, private new builds have failed to recover to pre-recession rates with builders adopting a more cautious approach to developments.
This has left a lot of frustrated households thwarted in their aim of moving to a new home.
The Scottish government points out 80,000 affordable homes have been delivered since 2007 and the rate of progress is improving - the 5,340 social rented homes delivered in 2018 was a 19% increase on the previous year.
But the number of new homes is struggling to keep up with sheer demand.
Over 400,000 more people live in Scotland today than they did in 2001 and the way we live is changing, with nearly a third of people now living alone - further increasing the pressure on housing stock.
Lenders
Historically the funding of residential developments were only completed with the client’s own funds or borrowed from the local bank manager making a local decision based on the track record with his client, probably the best way to lend. It wasn’t until boutique banks in Scotland such as James Findlay, Hill Samuel, W Mann & Co and latterly Commercial Credit (which became UCB) and of course Dunbar probably the most successful of all the property Banks with its relationship rather than transactional lending specialising in funding residential and commercial developments. In the late 90's RBS and BOS though dominated the market with, in some cases, extraordinarily inept underwriting.
The market has now changed with many “Challenger Banks” acquiring sound funding opportunities. Many though still need guidance in the Scottish market.