January Property Market Update 2023

Property Market Highlights

  • 2022 closed with average Scottish house prices hitting £242,213 – an increase of more than £23,000 year-on-year.
  • October to December 2022 saw the average price of properties across Edinburgh, the Lothians, Fife and the Borders rise to £291,023, an increase of 6.8% year-on-year.
  • Sales volumes dropped by 13.7% and new properties coming to the market also decreased by 4.3%, year-on-year, suggesting the market is cooling in response to turbulent economic climate.
  • Homes continue to sell for over their Home Report Valuation, with 87.7% of properties achieving a sale above Home Report valuation, with an average of 105.9% above Home Report being achieved, year-on-year.

October to December 2022 Saw Scottish House Prices Rise, Hitting £242,213

According to a report in The Herald, Scottish house prices hit an average of £242,213 at the end of 2022. This represents an increase of more than £23,000, year-on-year, compared to the same period the previous year.

Notably, significant growth was recorded throughout Edinburgh, the Lothians, Fife and the Borders. ESPC reported that average property prices in this area had reached £291,023, an increase of 6.8% on the same period the previous year.

Fife and Dunfermline enjoyed the largest price increases in Quarter 3 of 2022, with the average property selling for £228,514 in Dunfermline (a 14.8% annual boost) and £301,326 in East Fife (up 14.1% year-on-year).

Meanwhile, Edinburgh properties sold for an average of £306,013, a 5.6% annual rise. Demand for two-bedroom flats in Edinburgh’s city centre were particularly popular with buyers.

Families, on the other hand, flocked to Blackhall, Davidson’s Mains and Silverknowes for three-bedroom houses, pushing the average price up to £492,781 (a 12% increase). While further afield, demand for the same type of properties in South Queensferry and Dalmeny saw prices rise to an average of £324,128, representing a leap of 21.4%.

Volume of Property Sales and Properties Coming to Market Dropped 13.7% and 4.3% Respectively

Sales volumes and new property listings (properties coming to market) dropped by 13.7% and 4.3%, respectively, suggesting the market is cooling in response to the turbulent economic climate experienced since the “mini budget” in late 2022.

In Edinburgh, the Lothians, Fife and the Borders, ESPC reported that in the period from October to December 2022 the volume of listings dipped by 4.3% compared to 2021.

Meanwhile, according to the ESPC, the volume of property sales also fell in the third quarter of 2022, with a decrease of at least 13.7%, annually, in many areas across Scotland. However, sales volumes fluctuated from region to region, with some areas experiencing significant rises on an annual basis. Bonnyrigg and South Queensferry enjoyed increases of 59.3% and 81%.

There is no doubt that the current economic situation will have an impact on demand for property in Scotland. However, there are clear signs that mortgage lenders are offering improved rates in early 2023 versus late 2022 due to a desire to lend. We must also bear in mind that we are coming off the back of a historically high level of demand for property in the past couple of years. Activity levels appear to be on a par with, or still ahead of, 2019 and we expect that the Scottish property market will continue to prove that it can go the distance.

The ESPC’s take on the market is similar, with them recently commenting that, “despite the recent political and economic changes, owning a home is a good long-term investment and demand for quality local housing stock remains, albeit at a calmer pace than has been seen recently.”

Homes Continue to Sell for Over Home Report Valuation at Sale

Prolonging the trend seen throughout 2022, Scottish homes continue to sell for prices over their Home Report Valuations (HRV), according to ESPC. 87.7% of properties in 2022 sold for a price above HRV, achieving an average of 105.9% of the HRV. This is 0.6% lower than the same period (full year) in 2021, suggesting that the property market is cooling slightly.

Properties in East Lothian achieved an average of 108.5% over their HRV at sale. East Fife properties obtained 106.5%. Midlothian reached an average of 106% over HRV, while City of Edinburgh properties achieved 105.6% over HRV at sale. All of these figures represent a small drop versus the same period the previous year, suggesting a general cooling off the market.

While growth is slower compared to the previous year, homes on average continue to sell for prices in excess of Home Report valuation, which is good news for potential property sellers. As Paul Hilton, CEO of ESPC, comments, “in the past year, we’ve seen some properties sell upwards of 10% over Home Report value, and this cooling of the market means those who have been waiting to see how the market pans out may be encouraged to come forward.”

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