House price growth in Scotland is subdued too, according to new data
The Bank of England’s base rate reduction has failed to deliver increased activity in the Scottish market, according to award-winning broker Richard Jennings, as new data suggests relatively small recent house price growth north of the border.
The latest house price index for Scotland, from chartered surveyors Walker Fraser Steele, shows a subdued market, with average house prices in September growing by £400, up 0.2% from August.
That said, the increase took average prices above £226,600 for the first time, meaning that Scotland’s housing market hit a new peak for the fifth time this year, the data suggests.
Jennings (pictured left), who won Broker of the Year (Regional – Dumfries & Borders) at The Scottish Mortgage Awards earlier this year, welcomed the growth, albeit modest.
“This reflects the growing optimism in the housing market as a whole. following inflation firstly reducing and then stabilising,” he told Mortgage Introducer. “The housing sale and purchase market does however remain relatively calm with a reduced housing stock on the market in the build-up to the festive period.
“Whilst we have now seen our second base rate reduction of 2024 this has not yet delivered the activity within the housing and mortgage market, predominantly we feel due to ongoing uncertainty around the impacts of the US and UK Election outcomes and Labours new budget impacts. This seems to have worked its way through to the money markets with many lenders increasing their rates over the past week.”
He added: “A period of political stability, continued inflation management and lender rate reductions are what is really needed to provide the housing market the confidence boost to really see movement.”
What does the latest Scottish house price index show?
Fourteen local authority areas in Scotland reported rising prices in September, while 18 saw price falls, the house price index reports. In four local authorities prices hit new market highs, including two of the most expensive areas - East Lothian and East Renfrewshire. Highland and Renfrewshire also came within touching distance of prices which would represent new record highs. Overall, prices are up by 2-3% on a year-on-year basis in recent months.
The biggest falls year-on-year came from one of the lowest-prices authorities - Na h-Eileanan an Iar (formerly Western Isles) – and one of the most expensive – East Dunbartonshire.
Newbuild completions, while picking up slightly in the second quarter, are still well down on recent years and this underpins continuing concerns about housing supply in Scotland, the report noted.
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Has the autumn Budget impacted the Scottish property market?
The data does not yet reflect any impacts on buyer and seller confidence from the autumn budget, which will likely become evident over the coming months.
Scott Jack, regional development director at Walker Fraser Steele, said it would be interesting to see if mortgage pricing continues to harden as swap rates have risen.
“The Bank of England Base Rate cut was helpful for affordability and will doubtless ease some home owners’ payments but it is unlikely to provide a significant boost to home buyers,” he said. ““This is a limited and bumpy recovery to date. The Scottish residential market is stabilising, but challenges remain. Price pressure is most apparent in the upper end of the market, but homes that are well-priced and in good condition are still moving quickly.
“The supply of new homes completions remains a concern, with build out rates at their lowest level since 2017 (excluding the COVID-enforced slowdown). We've seen lenders raise fixed mortgage rates following the autumn budget and the US election result. However, there is an expectation for the base rate to continue falling in 2025, with mortgage rates likely to decrease modestly, too.”
The outlook for the next year is stable, Jack suggested, with steady demand for well-presented homes in desirable locations.
“Homes which are priced appropriately and in good condition will continue to attract buyer interest, while less competitively priced properties may struggle,” he said. “As mortgage rates ease and supply and demand levels balance, moderate growth is expected. Strategic pricing and positioning will be crucial to success in the residential property market over the next 12 months.”
He urged brokers: “Understanding local market dynamics is critical in successfully navigating the current environment.”
The Scottish government has reduced its spending on affordable housing, reflecting budgetary pressures. The recent UK Budget saw the Scottish settlement boosted by £3.4 billion for 2025/26 though this was mainly earmarked for health and education with £610 million for capital investment.
