Property Market Highlights
- Scottish property market proving more resilient than other UK nations
- Scotland one of the most affordable places to buy for First-Time Buyers, with First-Time Buyers making up 50% of all mortgages between 2021 and 2023
- Buyers bidding lower percentage over Home Report valuation
- New sales volumes and listings decrease over the summer months
Scottish Property Market Proving More Resilient than Other UK Nations
Data published by the Halifax House Price Index indicates the Scottish property market is holding its own amid the economic uncertainty of the last 12 months, faring comparatively better than other UK nations and coming second only to Northern Ireland.
Reporting on September’s findings, Halifax revealed that while each nation’s property market suffered a dip in average house prices year-on-year, Scotland ‘experienced a relatively modest decline of -0.8%’, with annual house prices hitting £201,594.
The South East of England saw the biggest drop, with house prices falling by -5.7%, hitting an average of £376,450. Meanwhile, in London, the UK’s most expensive place to purchase property, prices fell by -4.8% over the last year, with average house prices sitting at £525,678. Last up was Wales, with properties selling for -3.6% less than in 2022, with average house prices reaching £214,585.
Northern Ireland was the only market that out-performed Scotland, with house prices falling just 0.2% compared to last year and an average annual property price of £184,108.
When compared to the rest of the UK, these figures highlight the resilience of the Scottish market, particularly when we consider the tumultuous economic landscape of the last 12 months. The cost-of-living crisis, rising interest rates, and a drop in affordable mortgage products have taken their toll on the market as a whole, but activity remains strong north of the border, suggesting Scots continue to see the value in owning their own homes.
Scotland One of the Most Affordable Places to Buy for First-Time Buyers, Making Up 50% of All Mortgages Between 2021 to 2023
According to the latest Bank of Scotland First-Time Buyer Review, Scotland remains one of the most affordable places to purchase a home in Britain, with First-Time Buyers accounting for 50% of all home loans agreed between January and August 2023 – the same proportion recorded in both 2021 and 2022.
Yet tougher market conditions, such as the cost-of-living crisis, rising interest rates and lower availability of affordable mortgage deals, have led to a decline in the number of people stepping onto the property ladder for the first time.
Reporting on the Bank of Scotland’s recent findings, Lloyds Banking Group revealed that First Time Buyers in Scotland fell by 14% between January and August this year. However, the drop was significantly sharper for the rest of the UK, with 22% fewer First Time Buyers over the same period.
Buyers Bidding Less Over Home Report Valuations at Sale
The latest findings by ESPC show that the percentage that buyers are offering over the Home Report valuation has dropped in recent months. Homes marketed through ESPC and sold between June and August 2023 sold for an average of 103.8% of their Home Report valuation. This represents a drop of 4.9% versus the same period in 2022. Between June and August this year, 80.7% of properties marketed in ESPC sold for their Home Report valuation or more. This is a drop from 93.1% in the same period last year.
Is this indicative of a housing market crash? Absolutely not. We have experienced a period of several years where the level of competition between buyers for available stock has led to a phenomenon of buyers bidding significantly more than a Chartered Surveyor’s valuation of a property. It’s important to note that sellers are still, on average, achieving a sale price in excess of the Home Report valuation.
Nevertheless, buyers will welcome an increase in the number of Fixed-Price properties available and a reduction in the premium over Home Report valuation required to successfully secure a residential property. We are certainly finding that the dozens of buyers we represent and advise every month are finding it easier to secure their desired property this year than in recent years, particularly post-Covid lockdown.
In East Central Scotland, properties in East Lothian experienced the most significant drop versus Home Report valuation, with homes going for 104.5% over their Home Report Valuations at sale. Whilst this represents a dip of 7.2% versus last year, this still represents 4.5% more than a Chartered Surveyor has valued the property at.
New Sales Volumes & Listings Decrease Over Summer Months
According to the latest data published by ESPC, June to August 2023 saw a dip in the number of new properties coming to market compared to the same period last year, with a 3.3% decrease in new listings across all local areas (Dunfermline enjoyed the highest amount of new insertions, up 4.6% year-on-year). As ESPC comments, however, given that the summer period is typically quieter, this isn’t necessarily a cause for concern.
A dip in new property sales was also recorded, with a 10.5% decrease year-on-year across Scotland. In Dunfermline, property sales decreased by 27.7% year-on-year between June and August 2023 yet enjoyed the highest sales volume compared to other key Scottish local markets. In Edinburgh, two-bedroom flats in Leith proved the most popular type of property, followed by one-bedroom apartments in the same area. Meanwhile, sales volumes of two-bed properties in Leith dipped 19.4% while sales of one-bed homes experienced a growth of 38.2% – showing that Leith continues to be very popular with buyers on a lower budget.