Scottish Housing Market Review: Q3 2021

House Prices

Key Points

The average Scottish house price increased by an annual 10.0% in Q2 2021, to £169K (UK HPI).

Analysing the HPI data in more detail, it can be seen that strongest annual price growth was for detached and terraced properties, 11.1% and 10.9% respectively. Flats increased by the lowest amount, increasing by an annual 8.6%.

National

Source: Registers of Scotland / UK HPI

Scottish House Price Performance: National

House price inflation in Scotland, as measured by UK HPI, increased in Q2 2021 by 10.0% relative to Q2 2020. This is the highest quarter of house price inflation since Q1 2008, prior to the financial crisis. The average property price in Scotland stood at £169k in Q2 2021.

Data from Registers of Scotland shows a slightly lower increase in annual house price inflation in Q2 2021, of 7.6%. However, this data is not mix-adjusted, so could be affected by the composition of properties sold. This is supported by looking at the number of transactions in greater detail, with transactions for flats increasing to a greater extent than other property types and making up the largest proportion of transactions since Q2 2009.

Annual price growth to Q2 2021 was highest for detached properties (11.1%), marginally higher than for terraced properties (10.9%). Flats increased by the lowest amount, increasing by an annual 8.6%, as measured by UK HPI.

Scottish House Price Performance by Dwelling/Buyer Type

Chart 2.2 shows the rate of change in the average new and existing build property price in Scotland. This data is published with a lag relative to the headline HPI. In Q1 2021, the average Scottish existing build property price increased to a greater extent than the new build price, rising by 9.0% to £162K. The average new build price rose by 8.1% to £229K.

The UK HPI also shows that the average former owner occupier property price in Scotland increased by an annual 10.3% in Q2 2021, to £203K. Meanwhile, the average price of a property purchased by a first-time buyer increased by an annual 9.6% in Q2 2021, to £136K.

Source: UK HPI (Scotland)

Scottish House Price Performance: Regional

Registers of Scotland data show that house prices for Scotland rose in Q2 2021 and this growth was strong across Scotland. The largest increase was in the Clyde Valley, where house prices increased 10.0% annually to 172k (average arithmetic mean price; prices not mix-adjusted). The smallest increase was in Aberdeen/shire & Moray, which increased by 3.2% annually to £202k. Over the five year period to Q2 2021, the annualised house price inflation rate in Aberdeen/shire & Moray was -0.1%, relative to 3.1% across Scotland. This can in part be explained by lower oil prices, which have led to a decline in the oil industry, a crucial component of the Aberdeen economy, and therefore, the regional housing market. There was a further sharp fall in oil prices due to the initial impact of Covid-19 on the world economy during Q1 2020, although they have now recovered to pre-Covid levels.

The longer-term trend (as measured by the change in house prices over the 4 quarter period to Q2 2021 on the same period a year ago) shows that house price growth has been positive in all areas of Scotland. The strongest price growth was seen in Ayrshires, Dumfries & Galloway, where house prices increased by 10.4%, whilst the smallest increase in house prices was seen in Aberdeen/shire and Moray, where house prices increased by 2.0%.

A summary of the average house price in Q2 2021 by Scottish region is included below. This also includes the annual change in the average house price in Q2 2021, as well as the annual change in the average house price using a rolling four quarter period to Q2 2021, which smooths out volatility in quarterly data (Source: RoS).

Table 1. Regional house prices

• Aberdeen/shire & Moray
  • Average Price – Q2 2021 £202K
  • 12 Month Change 3.2%
  • Annual change (rolling 4 quarters) 2.0%
• A&B, Highland & Islands
  • Average Price – Q2 2021 £188K
  • 12 Month Change 7.7%
  • Annual change (rolling 4 quarters) 6.9%
• Ayrshires & D&G
  • Average Price – Q2 2021 £148K
  • 12 Month Change 4.9%
  • Annual change (rolling 4 quarters) 10.4%
• Clyde Valley
  • Average Price – Q2 2021 £172K
  • 12 Month Change 10.0%
  • Annual change (rolling 4 quarters) 6.1%
• Edinburgh, Lothians & Borders
  • Average Price – Q2 2021 256K
  • 12 Month Change 6.9%
  • Annual change (rolling 4 quarters) 6.8%
• Forth Valley
  • Average Price – Q2 2021 £179K
  • 12 Month Change 3.9%
  • Annual change (rolling 4 quarters) 7.6%
• Tayside & Fife
  • Average Price – Q2 2021 £178K
  • 12 Month Change 5.3%
  • Annual change (rolling 4 quarters) 7.8%
• Scotland
  • Average Price – Q2 2021 £192K
  • 12 Month Change 7.6%
  • Annual change (rolling 4 quarters) 6.7%

Source: Registers of Scotland