Scotland’s popularity as a residential, business, and leisure property haven has soared even higher in the post-pandemic times. There is value for your money with the quality of life and space. And, post-Covid, people are beginning to appreciate bigger gardens, space, and the semi-suburban life that detaches itself from the crowded city. Scottish house prices have seen a rise, and the trajectory of property trends in Scotland is steadily moving upwards. You still have time to invest before the price growth runs out, and homebuyers have plenty of options to look to for securing a home.
Trends in the last 12 months
Following the easing of home move restrictions in late June 2020, the Scottish housing market experienced a surge in property sales, fuelled by the pent-up demand and LBTT holiday (ended on 31 March 2021).
The latter part of 2020 saw a spike in overall property prices in the UK. The growth continued into 2021. A steady rise was seen through January to Q3 of 2021. Registers of Scotland record a steady increase in the annual price change of property in Scotland, starting from 6.9% in January to 16.9% in August, compared to the previous year. In September 2021, the annual price change of property dropped to 12.3% from 16.9% recorded in August.
What can be expected in the next quarter?
Industry leaders forecast a strong property market for the next quarter as restrictions get eased and a new normal begins. The average Scottish house price is projected to grow by another 3% in 2021 and the overall property market by more than 22.8% between 2021 and 2025.
Registers of Scotland statistics record an annual increase of 181.9% in property sales in 2021. It is explained by the reduced transactions in the 2nd quarter of 2020 due to home move restrictions as a result of Covid19.LBTT returns indicate stabilising housing market activity with LBTT returns in August 2021 8.3%, down from 18.2% and 12.1% in June and July 2021.The largest increase in transactions in the latest 12 months to Q2 2021was shown in Aberdeen/shire and Moray, and the smallest was in the Forth Valley.
An annual increase of 1.6% was shown for private housing rental prices in Scotland to August 2021. It continues a period of relative stability in nominal private rental price growth. The rental price growth since June 2017 has ranged between 0% and 2%, with an average of 0.7%. Adjusted to inflation, using CPI, the annual change in August 2021 was -1.6%.
Private housing rental prices rose to positive levels as CPI inflation fell due to the impact of Covid19. However, it has returned to negative territory with the recent increase in CPI inflation that reached a 3.2% in August 2021.
Home and Property Prices
The average Scottish house price as measured by UK HPI saw an annual increase of 10.0% in the second quarter of 2021 to £169,000.Registers of Scotland data show a slightly lower increase – a 7.6% in Q2 2021.As this data is not mix-adjusted, it could be affected by the composition of properties sold.The strongest annual price growth was experienced by detached and terraced properties, a rate of 11.1% and 10.9%, respectively. Flats had the lowest increase – an annual 8.6%.In the first quarter of 2021, the average Scottish existing build property price rose by 9.0% to £162,000. The average new build price rose by 8.1% to £229,000.
House prices rose across Scotland in Q2 2021. The largest increase was in the Clyde Valley, where house prices increased 10.0%, and the smallest increase was in Aberdeen/shire & Moray, which was by 3.2%.
New mortgages to first-time buyers increased by 35% over the one year period to Q2 2021 compared to the previous year, while new mortgages to home movers increased by 30%. There was a reduction in high LTV mortgage lending due to the impact of Covid19. However, recently a strong recovery in high LTV product numbers was seen, with the number of 95% LTV mortgage lending increasing from 8 in December 2020 to 283 in September 2021.
From May 2021, the interest rate premium on high LTV mortgages saw a decline. In August 2021, the spread between the average advertised 2year fixed 90% LTV and 75% LTV mortgage rate was 124 basis points, a reduction from 182 basis points seen in May 2021.
Buying a property in Scotland
Existing builds are usually advertised as ‘offers around’ or ‘offers over’ the asking or valuation price. New builds have a more stable pricing system as they are sold at a fixed price. This means the seller will accept a reservation, pending missives, at the specified price, which makes it easier for the purchaser to budget and helps to speed up the sale process. While you can lose out to a higher bidder with an older property, you are much more secure with new build fixed prices.
Once you reserve a new build at a fixed price, the legal missive process can begin. After you have an agreed contract with the seller, the conveyancing begins. Your lender will release the loan funds to complete the settlement on handover day.
Scottish properties are set to continue to increase in value and investing in one now is an astute choice. GS Brown Construction property developments offer some of the best-quality housing in Scotland.