House Prices Still Rising in Scotland

Estate agents DJ Alexander, and Rettie & Co, have published their latest analysis reports on the Scottish market.

Summary of Scottish House Prices and Investment Landscape

1. General Trend in House Prices:

Average Increase: House prices in Scotland rose by an average of 1.57% from June 2022 to May 2023.
Interest Rates Impact: Despite rising interest rates, prices recovered from initial falls, leading to positive price growth.

2. City-Wise Analysis:

Edinburgh: Saw the largest increase among major cities at 3.35%.
Aberdeen: Moderate rise of 0.81%.
Glasgow and Dundee: These cities witnessed decreases, with Glasgow down 1.68% and Dundee down 3.59%.

3. Regional Variations:

East Lothian: Experienced the highest increase at 16.31%.
Other Areas: Inverclyde was up 4.96%, and North Lanarkshire rose 1.66%.

4. Types of Properties:

Detached Homes: These outperformed other types, especially in East Lothian where the average price rose by £95,678 or 18.03%.

5. Market Sentiments:

Positive: There is optimism and a strong desire for home ownership, creating a buoyant market.
Concerns: Questions arise regarding how long the rising trend can continue, especially considering potential effects of rising interest rates.

6. Investor Sentiment towards Private Rental Sector (PRS) & Build-to-Rent (BTR):

Negative Views: Political risk and rent freeze legislation have led to negative sentiment from UK and international investors.
Supply Crisis: There is a significant problem with supply, meaning that demand far exceeds available rental properties.
Potential for Growth: Despite pessimism, there’s still potential for those bold enough to invest in the PRS and BTR sectors.

7. Development Pace & Future Plans:

Slower Development: The speed of housing development is below the trajectory elsewhere in the UK.
Planned Units: Approximately 14,000 planned BTR and MMR units in Scotland, valued at around £3bn, are yet to reach construction.

Conclusion:

These reports highlight a complex picture of the Scottish property market. On one hand, there’s positive growth in many areas and a robust desire for homeownership. On the other, the private rental sector faces significant challenges due to political intervention and a lack of supply. Edinburgh and East Lothian are experiencing particularly strong growth, while other areas like Glasgow and Dundee have seen declines. The market appears to be optimistic, but concerns about sustainability in the face of rising interest rates and negative sentiment in the rental sector add caution to the outlook.

For potential investors, understanding these regional variations, the performance of different property types, and the broader political and economic context is essential. Opportunities may exist for those willing to navigate these complexities, but careful consideration and perhaps professional guidance would be advisable.