House Price Index

April 2017 - Seven regions reach new peak prices in Scotland

Fast Facts

  • Glasgow reaches new peak price with six other regions and has the second-highest number of flat sales of any area in Scotland.

  • Average house price now stands at £175,087.

  • Annual price growth of 3.6% in April overtakes England and Wales as first reported.

  • Increased demand from first time buyers and tight supply pushing up prices.

Headline News

  • House prices surged in April in Scotland as the average price of a home rose by £3,217. After stalling in March, prices increased 1.9% – the strongest growth since 2007, if spikes in March 2015 and 2016 as a result of changes to the Land and Buildings Transaction Tax are taken out of the equation.

  • The average house value increased to reach £175,087 with annual house price growth rebounding strongly, rising from 2.2% in March to 3.6% in April, and now outpacing the rate for England and Wales as a whole (3.5% in the year to April).

  • Price growth is driven by strong demand coupled with weak supply, most prominently seen in Glasgow, a popular location for first time buyers, which has experienced the strongest annual growth of any significant market in Scotland over the last year.

Quick Quotes

Christine Campbell, Your Move managing director in Scotland, said:

“Our figures highlight that whilst average house prices continue to rise, it is first time buyers who are driving the market as they continue to take advantage of ongoing low interest rates and relatively low deposit requirements. They hold the ‘key to the door’ and as such, are influencing local markets which is leading to greater balance in prices amongst Scotland’s major cities.

“While the election result may have come as a surprise to some, it is imperative that
demand for first time buyer properties is met with increased supply through new builds
and that confidence in the market is restored to encourage activity across the board.”

Alan Penman, business development manager for Walker Fraser Steele, one of Scotland’s oldest firms of chartered surveyors and part of the LSL group of companies, said:

“While it’s encouraging to see the demand from first time buyers, we need to address the fundamental weakness in supply of housing stock in Scotland, as elsewhere in the country. The elections in June should bring new housing policies and initiatives which we hope will bolster Scotland’s market.”

Key insights

  • The strong growth in April reflects both fundamental strength and fundamental weakness in the Scottish housing market. On the one hand, the increase seen in April is driven by significant growth across a broad section of the market, rather than being driven solely by a hike at the top. In fact, sales of high value properties, those over £750,000, continue to trail last year’s totals: just 17 were sold in April, against 27 in the same month last year.

  • First time buyers are pushing the Scotland housing market, supported by low interest rates and lower deposits required by lenders. A recent Council of Mortgage Lenders’ analysis of Scotland’s market shows the number of first time buyers rising by over a fifth in the first quarter of the year from 6,200 in 1 of 2016 to 7,600 in Q1, 2017.

  • At the same time, strong demand is meeting a squeeze on supply. The most recent monthly survey from the Royal Institution of Chartered Surveyors shows surveyors’ average housing stock at an all-time low. This is increasing competition – and prices – for the relatively few properties that are coming onto the market.

  • That plays well to Glasgow’s market, which comes just behind Edinburgh in the number of flats sold, and where average prices of £148,245, against £252,758 in the capital, make it considerably more affordable. Economic growth and employment opportunities in Scotland are pushing up property prices in many areas, including here. With access to good schools and a short commuting distance from the city centre, but with average prices in Glasgow still only half of those seen in Edinburgh, affordability continues to drive activity.

  • Nevertheless, there has been strong growth in local authorities across the price spectrum in Scotland in the last year. At the top end, East Renfrewshire (up 7.5% annually) and East Dunbartonshire (10%) are both showing strong growth, while Edinburgh, up 3.1% annually, remains solid. So, too, further down are not just Glasgow but also Moray (8.0%), Argyll and Bute (10.5%) and the Orkney Islands which led price growth with prices up 17.2%, albeit on relatively few sales. East Renfrewshire, Midlothian, Moray, the Orkney Islands, Glasgow, Renfrewshire and Falkirk all saw new peaks in average prices in April.

  • Overall, two thirds of Scotland’s 32 local authority areas saw prices rise in the month, and 23 of the 32 have seen prices rise over the year. Of those that didn’t, Na h-Eileanan Siar has seen the biggest falls in the last year, with prices down 4.7%.

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