Is it reflecting the trend in the broader UK housing market?
The average price paid for a house in Scotland fell by 0.2%, or £485, to £223,604 in September 2022, according to the latest Walker Fraser Steele Acadata House Price Index for Scotland.
Scottish house prices dropped for the second consecutive month, following 13 months of successive rises. Despite this, the price is still 6.3%, or some £13,300, higher on an annual basis than it was 12 months prior.
However, the annual rate of price growth is slowing, from the 10.4% growth in June to September’s rate of 6.3%.
“As the principal drivers underpinning much of the house price growth in the Scottish house market over the last couple of years – the pandemic, record low interest rates, and the fiscal stimulus of the Stamp Duty holiday – become a distant memory, it’s no surprise that the housing market reflects this,” Scott Jack, regional development director at Walker Fraser Steele, commented. “This is not only happening here in Scotland, but is reflected across the broader UK housing market.”
“We should not be surprised if this annual rate of price growth slows. But things to keep an eye on include the budget this week, the expectation that inflation is easing, and that mortgage rates and affordability will improve in the first quarter of next year, and the lack of supply that has always supported higher prices. These may all mean this reduction in house prices is less short-lived than many suspect.”
Read more: House prices start to fall, RICS survey finds.
In September 2022, 29 of the 32 local authority areas in Scotland saw their average prices rise over the levels seen 12 months earlier, but two fewer than in August. The areas that saw values fall over the year were Aberdeen City (-3.8%), Sterling (-1.1%), and Clackmannanshire (-0.4%). The area with the highest annual increase in average house prices in September 2022 was the Orkney Islands, where values have risen by 28.5% over the year.
In monthly terms, 16 of the 32 local authority areas experienced rising prices in the month, which is four fewer than in August. The largest increase in average prices on the mainland in September was in East Lothian, up by 7.3%.
The Walker Fraser Steele Acadata House Price Index for Scotland uses the actual prices at which every residential property in the country was transacted, including prices for properties bought with cash, using the data provided by Registers of Scotland as opposed to valuation estimates or asking prices. The current index is not forecast, but is based on achieved prices.
