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House Price Index

October 2017 - Scotland’s annual house price growth second
highest of Britain’s regions

Fast Facts

  • Scotland’s annual price growth slows to 3.5% but remains second highest of Britain’s regions.

  • Lack of supply and strong demand drive price increases across the country.

  • Midlothian and Stirling lead growth supported by sales of new builds.

  • Four out of the five local authorities seeing prices decline are on the East Coast.

Headline News

  • House prices in Scotland dipped marginally in October, falling 0.2%, with the average property value dropping £276. The rate of annual growth also fell, with prices at the end of October 3.5% higher than a year before, against 4.4% last month.

  • Annual growth in Scotland remains stronger than most other UK regions, however. It’s well above the average for England and Wales as a whole in October, which stood at just 1.3%, and only the South West of England has grown faster (up 4.3% annually). At £175,722 the average price in Scotland is almost £6,000 higher than a year ago.

Quick Quotes

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

“Despite a slowdown in annual growth, both the strength and consistency of the Scottish market continue to be impressive. With demand strong and property still affordable, Scotland looks like it will finish 2017 in good shape.”

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:

“So far Scotland’s shrugged off the malaise that’s affected many other UK regions. With unemployment edging up and the rate of growth slowing, though, the impact of the provisions in December’s draft budget will be critical in determining whether that continues.”

Key insights

  • The resilience of the housing market in Scotland continues to rest on strong demand on the one hand and tight supply on the other.

  • The first is fuelled by historically low interest rates, a relatively strong economy and affordable property, with median full-time earnings that are the third highest in the UK (at £547.30 a week or £28,460 a year) and a median house price (of £135,000) that’s the lowest. Scotland’s “affordability ratio” is therefore 4.7 – the lowest of the UK. The equivalent figure for England is 7.8.

  • When it comes to supply, meanwhile, October’s Royal Institution of Chartered Surveyors Residential Market Survey identifies Scotland as having the fourth lowest number of new vendor instructions in the UK.

  • Both Scotland’s affordability ratio and annual price growth benefit from a capital city market that continues to be strong. Annual growth in Edinburgh, at 3.4%, is close to the national trend, in contrast to the price falls seen in London that pull the average down for England and Wales. Prices in Scotland’s first city, at an average of £258,426, also remain much closer to the rest of the UK, being only slightly less than 50% of London prices, which are closer to double the average in England and Wales.

  • Scotland’s strength is broad-based, though. Only five of its 32 local authority areas haven’t seen prices grow over the 12 months to October 2017. Of those, four are on the East Coast, starting at Aberdeenshire (down 1.1%) in the north, and working down as far as Dundee City (down 1.8%) in the south. The biggest fall has been in Clackmannanshire, however, where prices are 5.3% lower than last year.

  • By contrast, there’s been good performance from areas throughout Scotland from Highland (up 4.6% annually) to the Scottish Borders (4.5%). A number have performed particularly strongly: Midlothian, which set a new peak for the third time this year in October and has prices up 8.7% annually, bolstered by 140 new-build homes sold in Dalkeith; East Dunbartonshire, which saw the biggest monthly uplift on the mainland (5.3%) and has seen an annual increase of 6.9%; and East Renfrewshire and Fife, which have both seen annual prices increase 6%.

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