Scottish island house prices soar 30% as most expensive places revealed

House prices on Scottish islands have soared 30 per cent in five years as a rush of cash buyers move into the market.

The average value of houses sold on the islands between 2018 and 2023 was £182,000 - up from £140,000 in 2018. By comparison, a rise of 23 per cent in average values was recorded on mainland Scotland over the same period, with the average price sitting at £185,000.

Research by Registers of Scotland shows the islands where properties have been most sought after.

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The period covered by the data on rising values includes the pandemic, when there were ongoing reports around people securing houses for inflated cash prices, some without seeing the property in person first.

In 2023, the highest prices for residential properties were paid in the Highland Islands, which include Skye, Rum, Eigg, Canna and Raasay.

Portree on the Isle of Skye. The Highland Islands recorded the highest average house price among all Scottish islands in 2023 with houses changing hands for an average of £249,000. | CC/Markus Bernet

Here, the average price of a house sale rose to £249,000, with 154 residential properties changing hands and 58 per cent of them bought using cash.

The figures comes amid ongoing challenges surrounding the growth in second homes in island communities and the difficulties islanders and incoming workers face when trying to find affordable housing which can be secured on a local wage.

Last year, most island properties were snapped up in Arran, Bute and Cumbrae, with 310 properties sold. This cluster of islands saw the most cash buyers move in, with 75 per cent of properties - which sold at an average price of £151,000 - bought outright.

Ardhasaig on the Isle of Harris. Houses sold for an average of £145,000 in 2023 on the island - along with Lewis, Great Bernera and Scalpa - with 53% of them paid for in cash, according to new data. | Chris Combe/CC

Lewis and Harris, Great Bernera and Scalpa also experienced a heated market, with 236 properties sold at an average of £145,000. Just over half were cash sales.

Residential properties in the Argyll Islands, which include Mull, Islay, Jura and Tiree, sold for an average of £215,000 with 66 per cent paid in cash.

High numbers of sales were recorded on the Orkney mainland, with 273 properties changing hands last year for an average of £203,000. In mainland Shetland, the average price was £186,000 with 205 properties sold.

In the Uists and Barra, the average price of a house sold last year was £185,000 with 63 per cent of properties sold paid for by cash. A total of 59 homes changed hands.

Christine Brett, director of RE/MAX Skye, said most people buying properties on the island were relocating there permanently, either to retire or to work from home.

She said: “There was an emphasis on permanent homes rather than second homes and it was mainly people relocating from towns and cities across the UK, both in England and Scotland. Interest from overseas buyers has been curtailed by Brexit.

“Some people are relocating for retirement and others are relocating because they can work from home.”

She said most statistics surrounding property transactions tended to give a “distorted” view of the market given the heightened activity around the time of the pandemic.

Ms Brett added: “Immediately post-Covid, a lot of people were paying well in excess of home report valuations. In some cases you were seeing people going over £50,000 to £100,000. That has settled down now but it has allowed the overall picture to become distorted.”

Jennifer Henderson, Keeper of the Registers of Scotland, said the report brought “valuable insight” into property prices across the Scottish islands,

“It demonstrates Registers of Scotland’s commitment to providing innovative and accessible land and property data that is valuable to the people, businesses, and policymakers of Scotland,” she said.

The figures comes as policymakers at both local and national level continue to face the challenges of attracting people, particularly families, to relocate permanently to islands to stem depopulation and support economic growth.

Affordable housing has consistently been raised as a barrier to drawing in new residents.

Housing minister Paul McLennan said the Scottish Government had supported the delivery of more than 1,100 affordable homes on islands across Scottish islands. Of a target of new 110,000 affordable homes by 2032, at least 10 per cent will be built in rural and island communities, he said.

“The Rural Affordable Homes for Key Workers Fund and Rural and Islands Housing Fund are key elements of our approach to addressing specific rural and islands housing issues where they arise,” he said.

“We have also delivered secondary legislation enabling local authorities to make decisions about the council tax treatment of second homes to determine the balance in the use of housing to meet local needs. I have encouraged councils to fully consider the role that second homes have in their communities and to use these additional powers where required.”