Average house price in Scotland up by over 20 per cent since Covid pandemic

Average house prices grew 9.5 per cent in Scotland in the second quarter of this year, despite the annual growth having otherwise slowed.

The average house price has now hit a a record high of £181,422. Across the UK as a whole, the average house price in July was £271,209.

The data from the Nationwide Building Society found that across the UK annual house price growth accelerated slightly in July to 11 per cent from 10.7 per cent in June, with prices up by 0.1 per cent month on month, marking the 12th monthly increase on this measure in a row.

The housing market retained a surprising degree of momentum in July, despite the mounting pressures on household budgets, according to an index.

Andrew Harvey, senior economist at Nationwide Building Society, said: “Scotland saw a slight slowing in the annual rate of house price growth in the second quarter of 2022 to 9.5 per cent, from 12 per cent in the first quarter. Nonetheless, average house prices reached a record high of £181,422 and have increased by over 20 per cent since the onset of the pandemic.

"House price growth has outpaced earnings growth in recent years, making it more challenging for prospective first-time buyers. Despite this, Scotland remains more affordable than most parts of the UK, with an average first-time buyer house price to income ratio of 3.6, compared with a UK average of 5.9.”

Robert Gardner, Nationwide’s chief economist, said transactions among home-movers with a mortgage had slowed more than other sectors, with the recent stamp duty holiday, which ended last year, encouraging home-movers to bring forward purchases at that time.

He said: “The housing market has retained a surprising degree of momentum given the mounting pressures on household budgets from high inflation, which has already driven consumer confidence to all-time lows.

“While there are tentative signs of a slowdown in activity, with a dip in the number of mortgage approvals for house purchases in June, this has yet to feed through to price growth.

“First-time buyer mortgage completions have remained resilient, and are now (around) 5 per cent above pre-pandemic levels, despite growing affordability pressures.

“Indeed, house price growth has continued to outpace earnings by a wide margin, increasing the deposit hurdle, and, together with higher interest rates has pushed up mortgage repayments relative to incomes.

“The number of cash transactions has remained elevated, though its share of activity has remained broadly stable at (around) 35 per cent.”

Mr Gardner added: “We continue to expect the market to slow as pressure on household budgets intensifies in the coming quarters, with inflation set to reach double digits towards the end of the year."

Iain McKenzie, chief executive of the Guild of Property Professionals, said: “Over the past month the number of buyer inquiries has started to subside, and we are seeing a more balanced sales market that could mean we will see house price growth cool.

“While home owners have seen the value of their property grow substantially, increasing financial pressure from cost-of-living inflation has many hesitant about upscaling and some potential movers are now deciding to stay put.”