Scottish Housing Market Review: January - March 2021

House Prices

National

Source: Registers of Scotland/UK HPI (Scotland)

Scottish House Price Performance: National

House price inflation in Scotland, as measured by UK HPI, increased in Q1 2021 by 9.1% relative to Q1 2020. This is the highest quarter of house price inflation since Q1 2008, prior to the financial crisis. House price growth then fell back slightly in April 2021, with the annual increase falling to 6.4%, possibly influenced by the temporary reduction in LBTT coming to an end on 31 March 2021. The average property price in Scotland stood at £166k in Q1 2021.

Data from Registers of Scotland shows an even higher increase in annual house price inflation in Q1 2021, of 11.6%. However, this data is not mix-adjusted, so could be affected by the composition of properties sold. This is supported by looking at the UK HPI in further detail, with annual house price growth greatest for terraced and detached properties (10.6% and 10.3%) and lowest for flats (7.1%) in Q1 2021. However, in April 2021 annual price growth for flats (7.8%) was higher than other property types, the first month since March 2020 that price growth for flats has outperformed the all property index, although the small number of transactions in April 2020 may make April's growth rates less reliable than normal.

Key Points

The average Scottish house price increased by an annual 9.1% in Q1 2021, to £166K (UK HPI), before moderating somewhat to 6.4% in April, following the ending of the temporary reduction in LBTT.

Analysing the HPI data in more detail, it can be seen that price growth for terraced properties (10.6%) was higher than for flats (7.1%) to Q1 2021, although flats outperformed other property types in April 2021.

Scottish House Price Performance by Dwelling/Buyer Type

Chart 2.2 shows the rate of change in the average new and existing build property price in Scotland. This data is published with a lag. In Q4 2020, the average Scottish new build property price increased to a greater extent than the average existing build price, rising by 9.2% to £226K. The average existing build price rose by 7.3% to £161K.

The UK HPI also shows that the average first-time buyer property price in Scotland increased by an annual 9.0% in Q1 2021, to £133K. Meanwhile, the average price of a property purchased by a former owner occupier increased by an annual 9.4% in Q4 2020, to £199K.

Source: UK HPI (Scotland)

Regional

Scottish House Price Performance: Regional

Registers of Scotland data show that house prices for Scotland rose in Q1 2021 and this growth was strong across Scotland. The largest increase was in Ayrshires & Dumfries and Galloway, where house prices increased 19.4% annually to 158k (average arithmetic mean price). The smallest increase was in Aberdeen/shire & Moray, which increased by 7.1% annually to £200k. Over the five year period to Q1 2021, the annualised house price inflation rate in Aberdeen/shire & Moray was 0.6%, relative to 4.7% across Scotland. This can in part be explained by lower oil prices, which have led to a decline in the oil industry, a crucial component of the Aberdeen economy, and therefore, the regional housing market. There was a further sharp fall in oil prices due to the initial impact of Covid-19 on the world economy during Q1 2020, although they have now recovered to pre-Covid levels.

The longer-term trend (as measured by the change in house prices over the 4 quarter period to Q1 2021 on the same period a year ago) shows that house price growth has been positive in all areas of Scotland.

A summary of the average house price in Q1 2021 by Scottish region is included below. This also includes the annual change in the average house price in Q1 2021, as well as the annual change in the average house price using a rolling four quarter period to Q1 2021, which smooths out volatility in quarterly data (Source: RoS).

Aberdeen/shire & Moray
Average Price - Q1 2021 £200K
12 Month Change 7.1%
Annual change (rolling 4 quarters) 0.9%

A&B, Highland & Islands
Average Price - Q1 2021 £195K
12 Month Change 12.6%
Annual change (rolling 4 quarters) 6.9%

Ayrshires & D&G
Average Price - Q1 2021 £158K
12 Month Change 19.4%
Annual change (rolling 4 quarters) 11.9%

Clyde Valley
Average Price - Q1 2021 £181K
12 Month Change 10.1%
Annual change (rolling 4 quarters) 5.9%

Edinburgh, Lothians & Borders
Average Price - Q1 2021 260K
12 Month Change 9.7%
Annual change (rolling 4 quarters) 6.8%

Forth Valley
Average Price - Q1 2021 £189K
12 Month Change 16.1%
Annual change (rolling 4 quarters) 9.7%

Tayside & Fife
Average Price - Q1 2021 £187K
12 Month Change 12.5%
Annual change (rolling 4 quarters) 8.5%

Scotland
Average Price - Q1 2021 £200K
12 Month Change 11.6%
Annual change (rolling 4 quarters) 6.7%