Analysts highlight growing optimism in the market
Scotland’s housing market is showing signs of a steady recovery, with average property prices climbing by 1.9% over the past year. This growth, reflected in a report by Walker Fraser Steele, highlighted the resilience of the market despite economic pressures and higher taxes, compared to other parts of the UK.
According to the latest House Price Index, the average property price in Scotland in July 2024 was £225,113, an increase of £400 (0.2%) from the previous month. While this represents only a slight increase, it continues a trend of prices holding above their previous peak, set in September 2023, as noted by Scott Jack, regional development director at Walker Fraser Steele.
Resilience in the face of economic pressures
Jack attributed the strength of the market to a combination of factors. “Scottish average house prices in July picked up by more than £400 compared with June, but have essentially held steady since the new peak reached in May,” Jack said. He emphasised the role of higher property and personal taxes in Scotland, which have not dampened demand from prospective buyers.
Interest rate cuts are expected in the coming months, potentially making mortgages more affordable for first-time buyers. Mortgage advances to first-time buyers, who often face greater affordability challenges, are on the rise. Jack has suggested that with a robust job market and stronger-than-expected economic growth, prices are likely to remain stable or increase further throughout the year.
Local trends and record prices
Among Scotland’s local authorities, West Lothian stands out, reaching record-high prices for the third time this year. The area’s housing market continues to thrive, with average prices rising by 6.6% year-on-year. East Renfrewshire also saw a significant increase, with property prices rising by 7.5% in the same period, now averaging £350,737.
In total, 18 local authorities reported monthly price increases in July. Notably, Angus has seen consistent growth, with price increases reported for seven consecutive months.
Outlook for the remainder of 2024
Sales activity has also picked up, marking a “welcome and significant change” in the market. June and July 2024 saw stronger-than-expected sales figures, with activity levels exceeding those of the previous year. According to Walker Fraser Steele, the Registers of Scotland has yet to finalise the data for July, but estimates suggest that sales transactions were well above those recorded in July 2023.
This recovery comes after several months of uncertainty, fuelled in part by interest rate hikes and economic pressures. However, with borrowing costs now stabilising, the market appears to have turned a corner.
While affordability challenges remain, especially for first-time buyers, there is optimism that the easing of interest rates will continue to support the market, the report highlighted. Rising rents and stable house prices may also push more renters into homeownership, as borrowing becomes more accessible.
The report also highlighted that despite these positive indicators, there is still some uncertainty regarding government policy. The upcoming Autumn Budget statement in October may provide further clarity on the housing market, though for now, the outlook remains positive.
What are your thoughts on the recent analysis? Share them in the comments below.
