Did you know that Scottish house prices are at a record high? Here’s a look at what’s causing the spike, and what it means for buyers and sellers in Scotland right now.
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What’s the average house price in Scotland?
According to Zoopla, the average price paid in Scotland for a property is £201,651. As per Zoopla’s estimates, the average house is currently worth £212,913, which adds more than £8,000 in value to the average Scottish property. House prices in the country have jumped 1.41% since July 2021, and 4.32% in the last year.
Interestingly, Scotland’s equivalent of the Stamp Duty holiday, the LBTT holiday, ended on 31 March 2021, and yet prices have continued to rise. So what’s causing this surge? And how long can we expect the spike to last?
Why are Scottish house prices rising so much?
There are a few factors at play here:
- There’s still a shortage of supply in Scotland, so buyers need to pay more to get the homes they want.
- Covid-19 restrictions relaxed slightly later in Scotland, and people are now confident to start moving again.
- As people continue to work from home, buyers want larger properties with garden space and room for home offices.
- Scottish commuters are moving out of cities and into more rural or suburban areas.
- Buyers are keen to secure low mortgage interest rates before they rise again.
So, while the LBTT holiday undoubtedly encouraged market activity, the combination of low regional supply, high demand and attractive interest rates could be behind the continued surge.
How do rising house prices affect buyers?
Rising house prices affect buyers in a number of ways.
For one thing, it’s much harder for new buyers to get on the ladder, as they need significantly higher deposits that they may struggle to save up. What’s more, if house prices rise, buyers need a larger mortgage to cover the cost. They may struggle to find a larger mortgage or find that they can’t afford the higher repayments, meaning they can’t afford to move.
For sellers, it’s not all great news, either. Even if they sell their property for a good price, they’ll still need to pay above-average rates for a new home. So, the price surge probably isn’t sustainable in the long term for the housing market more generally.
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What will happen to house prices in Scotland?
Well, no one can say for sure. However, if buyers can’t afford the rising house prices, we could see a fall in demand. If demand falls, prices may drop, too, which could result in a more stable market.
What’s more, living costs are increasing right now, as energy prices rise and the Universal Credit uplift comes to an end. Higher living costs mean buyers are less likely to take risks on the housing market, which could encourage house prices to stabilise.
Takeaway
While house prices in Scotland look set to stay high in the short term, there are signs the market will stabilise as we move into 2022. So, if you’re looking to buy a house in Scotland, it might be best to spend the next few months researching your ideal property and sorting out your finances rather than jumping into a purchase.
Don’t forget to explore the different mortgages on offer, and check out some price comparison sites like MoneySuperMarket to find the best value home insurance once you’re ready to move.
