Scottish house prices set to step up in 2024, says Edinburgh estate agent Rettie & Co

Edinburgh estate agent forecasts higher property sale prices in coming year as sector emerges from “challenging” environment.

A major player in the Scottish property sector is forecasting a 1.5 per cent jump in house prices north of the Border in 2024 after some slowing of activity this year, and continued pressure on the private rental sector (PRS), with double-digit increases in average rents on new listings.

Edinburgh-based estate agent Rettie & Co is also expecting overall residential property transaction activity to increase to about 4.3 per cent, while it added that other key points from its Winter Market Briefing include citing the latest figures for October 2023 from Registers of Scotland indicating that the average Scottish house price was down 1.5 per cent against the same month last year. However, the average house price between January to October 2023 is up 1 per cent year on year, supported by tighter supply.

The firm also highlighted the “sharp” increase in mortgage rates, saying that in early 2022, the average mortgage on a new purchase in Scotland was under £800 per calendar month, but this rose to more than £1,200 by mid-2023. Turning to the PRS, it predicted a continuing fall in supply levels, subject to forthcoming legislation, and said this market “remains in a condition of significant excess demand, pushing-up advertised rents, and reducing time to let”. The estate agent added: “Scottish Government solutions to tackle rising rents with price caps may further reduce availability, leading to significant shortages in pressed markets.”

'Sales activity should recover in 2024, giving more buyers and sellers confidence to enter the market,' says Rettie & Co. Picture: Getty Images/iStockphoto.

Dr John Boyle, director of strategy and research at Rettie & Co, said regarding the property sector overall: “The market continues to adjust to a new environment including higher interest rates. Demand has dropped back, but not excessively, and sales activity should recover in 2024, giving more buyers and sellers confidence to enter the market. As for the rental market, there is likely to be continued pressure on the [PRS], as demand has not dampened in the way it has in the sales market.

“Transactions have remained relatively robust this year, although they look like ending close to 10 per cent down on 2022 levels. [However], house prices have remained relatively robust in 2023, staying fairly flat across Scotland as a whole.”

He also flagged the usual festive slowdown at present, but added: “We are also seeing positive signs that we can emerge from a challenging environment over the next year. The Royal Institute of Chartered Surveyors is now predicting future sales expectations turning positive in Scotland after a period of negative market sentiment, and there are positive signs with mortgage lending, with two-year fixed rates now back below 5 per cent. These indicators point towards stabilising and improving market conditions as we enter 2024, although the challenges of above-target inflation, relatively high interest rates, and a cost-of-living crisis remain.”

Meanwhile, a study from Bank of Scotland has found that Clydebank saw the greatest house price growth in Scotland in 2023 (up 13.6 per cent or £18,376 year on year). The report, which looked at mortgage approvals in the year to October 2023 compared to 12 months previously, however also found that homes in Dumbarton saw the greatest drop at 16.1 per cent or £31,827.