housing market is divided by location more than ever before - David Alexander

It would seem that homes and the housing market are going to play a key role in the next general election. This week both Rishi Sunak and Sir Keir Starmer made promises to be the party of home ownership with the Conservatives thinking of resurrecting the Help to Buy scheme to assist first-time buyers while Labour is pledging to set a target of 300,000 new homes a year.

So far there have been no clear plans to replicate an expansion in the delivery of house building and home ownership in Scotland so we must wait and see north of the Border, but this is undoubtedly one of the key political issues of the day and must be taken seriously in all parts of the UK.

For most people, their home is their main asset, and the performance of the property market is central to the way they perceive how well they are doing financially and whether they feel prosperous. In Scotland, between February 2013 and February 2023, the average price of a house has risen by 50.0 per cent but this figure includes enormous regional variations within the country. In Aberdeen, for example, average prices have fallen by 16.3 per cent over the last decade while in Glasgow they are up 71.6 per cent.

Indeed, analysing the latest data shows that the gap between Scotland’s two largest cities and the rest of the country is expanding, with both Edinburgh and Glasgow soaring ahead of the rest of the country with average increases in house prices of £129,054 and £69,538, respectively. Inflation over the same period was 29.8 per cent showing a real-terms increase in price of between 20.2 per cent for Scotland as a whole to 41.8 per cent in Glasgow.

David Alexander is CEO of DJ Alexander Scotland Ltd

Within different property types there has been an enormous range of increase in values with detached homes far outperforming the rest of the market. Across Scotland the average price of a detached home increased by 55.4 per cent but in Edinburgh and Glasgow the increase over the last decade was 93.1 per cent and 101.2 per cent respectively.

Flats have underperformed the market as a whole increasing by an average of 44.1 per cent (below the 50 per cent rise for all property) but again both Edinburgh and Glasgow are ahead of the rest of Scotland, with an increase of 58.4 per cent and 62.9 per cent respectively.

These figures highlight just how much average property prices have increased over the last decade. A rise of 50 per cent when inflation is at under 30 per cent means that real-term values have increased substantially at a time when many may have felt that property prices were fairly stagnant.

Indeed, a lot of this growth has occurred since the start of the pandemic, so we have experienced a period of fairly stable increases for seven years followed by an enormous rise in prices since February 2020. So, while we are now seeing a price correction on the recent very large increases the long-term price growth remains strong.

The average price of a house in Scotland has risen by 50 per cent in the last ten years

We can see from these numbers that many parts of Scotland are thriving, and that home ownership remains a positive aspiration. But there may be rising concern that our two largest cities are becoming much more expensive than other parts of the country and homes in Glasgow and Edinburgh are increasing in price at a rate that may make them unaffordable for people to buy into if the pace of growth continues for another decade.

In particular, the average price of a detached home in the capital is now £418,000 more than for the rest of Scotland. This is surely a gap that is, or will become, insurmountable for anyone to buy into if it continues to rise at this pace. We have a broadly healthy property market but one that is perhaps now becoming divided by location more than at any time in the past.

David Alexander is CEO of DJ Alexander Scotland Ltd