The average UK house price surpassed £260,000 for the first time in March 2022, and the average price of a new build Scottish home rose to £265,447 in December of last year. For those who made timely investments in residential property, taking advantage of the stamp duty holiday and pandemic-fueled relocation to greener suburbs, it is a winning game. And for those who are still in the race for space, Scottish property trends for 2022 will point you in the right direction. Knowing the big picture of the property landscape and its future helps to decide whether you are buying, selling, or renting right now.
Supply and demand predictions for 2022
Demand remains strong across Scotland, but supply is yet to catch up at the same rate. All-sector new build homes supply was affected due to lockdown measures, and we saw a decrease in supply. The most recent figures for new build completions published by the Scottish Government cover the year 2020. Supply decreased by 34.6% compared to 2019, affected by lockdown measures from March to June 2020.
While more recent data by the Registers of Scotland has been delayed, the UK HPI shows the latest trends for private new build sales. The data indicates a recovery of new build supply. The Q4 2021 data shows an increase of new build transactions by 19.4% relative to 2020. 2022 will see supply and demand level out and achieve pre-pandemic level conditions. More property listings have entered the Scottish housing market since the beginning of 2022.
Impact of Covid-19
Despite the impact of Covid-19, the Scottish property market is on the road to recovery. We saw a slump in sales and supply, and a rise in the house price index between 2020 and 2021. Fewer transactions were received by the Registers of Scotland in 2020-2021 due to Covid-19 restrictions. The volume of residential sales in 2020-2021 was 95,428 — a decrease of 6.5% when compared with 2019-2020 (102,053 sales). The average price of a Scottish residential property in 2020-2021 was £194,100 — a 6.7% increase when compared with the 2019-2020 average price of £181,954.
Detached properties recorded the highest average price of all house types (£284,154) in 2020-2021 and the largest residential sales market share (31.5%), with a sales value of £5.8 billion. Detached homes rose by 15.3% in February 2022 to £328,000. New build residential property sales in Scotland (9,111) in 2020-2021 saw a decrease due to Covid-19 measures, falling by 26% in comparison to 2019-2020 (12,259 sales). The average price for a Scottish new build residential property in 2020-2021 was £268,140, seeing a 3.8% increase when compared with the previous year (£258,400). This upward trend has continued through 2021 and into 2022.
As measured by the UK HPI, detached properties had the highest annual price growth rate (18.1%) in Q3 2021. Flats had the lowest growth rate, increasing by a 10.8%. For first-time buyers, the average price of a property increased by 13.6% in Q3 2021, to £144,000.
The pandemic and subsequent lockdowns have shifted our way of thinking, especially about where we live. New hybrid working models have people reassessing their residential and property needs. Buyers are pursuing the once impossible dream of suburban, semi-rural, and rural life.
The average price of an urban Scottish residential property in 2020-2021 was £168,167, in comparison to £216,250 in rural areas. The volume of residential sales in urban areas in 2020-2021 decreased by 7.2% compared to the previous year. Rural areas saw an increase of 1%. The largest rise in the volume of residential property sales was in accessible rural areas compared to 2019, increasing by 2.5%.
Shift in Property Prices
Experts predict house prices in Scotland will continue to rise but will be less frenetic. Transactions are expected to slow down in 2022, but demand for good homes with outdoor space will continue. Scotland will continue to see demand outweigh supply, with projected price increases, however, this price growth will be more restrained. The current low mortgage rates will spur buyers on to secure a property early in 2022, contributing to further price growth. However, if inflation continues to rise as the Bank of England forecasts, it will raise interest rates. Higher interest rates will affect affordability. It could lead to a surge in sales in Q1 2022 as buyers look to take advantage of fixed rates mortgages and the current interest rate.
2022 will see the Scottish property market busy but less frenzied. However, the current inflation rates and economic volatility could drive up property prices further. Making your move to buy now could stop your property dream from stalling. Invest in a home built with premium materials and first-class craftsmanship when you buy a GS Brown Construction home.