Scottish Housing Market Review: Q2 2022

2. House Prices

National

Source: Registers of Scotland / UK HPI

Scottish House Price Performance: National

Average house prices in Scotland, as measured by the UK HPI, increased in Q1 2022 by 10.6% relative to Q1 2021. Apart from annual house price growth to Q3 2021 of 13.5%, this is the highest quarter of house price inflation since Q1 2008, prior to the financial crisis. The average property price in Scotland stood at £182k in Q1 2022.

Data from Registers of Scotland shows a lower increase in annual house price inflation in Q1 2022, of 1.1%. RoS data is not mix-adjusted, so it's likely to be affected by the composition of properties sold. This is supported by looking at the number of transactions in greater detail, with transactions for flats making up a greater proportion of total transactions in Q1 2022.

UK HPI data shows that annual price growth to Q1 2022 was highest for detached properties (15.3%). Flats increased by the lowest amount, increasing by an annual 6.8%.

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 relative to the headline HPI. In Q4 2021, the average Scottish new build property price increased to a greater extent than the existing build price, rising by 20.0% to £264K. The average existing build price rose by 9.0% to £175K.

The average price of new build properties is rising rapidly, with more recent monthly data to February 2022 showing an annual increase of 26.1%. This large increase is likely to be linked to the rise in the price of new build construction material (see Chart 10.3).

Source: UK HPI (Scotland)

The UK HPI also shows that the average price of a property bought by former owner occupier in Scotland increased by an annual 11.6% in Q1 2022, to £221K. Meanwhile, the average price of a property purchased by a first-time buyer increased by an annual 9.5% in Q1 2022, to £146K.

Scottish House Price Performance: Regional

Registers of Scotland data show that house prices fluctuated in Scotland in Q1 2022. The largest increase was in Edinburgh, the Lothians and the Borders, where house prices increased 3.9% annually to 270K (average arithmetic mean price; prices not mix-adjusted). The largest decrease was in Aberdeen/shire and Moray, which decreased by 1.3% annually to £197K.

The longer-term trend (as measured by the change in house prices over the 4 quarter period to Q1 2022 over the previous four-quarter period) shows that house price growth has been positive in all areas of Scotland. The strongest price growth was again seen in Argyll and Bute, Highlands and Islands, where house prices increased by 5.3%, whilst the smallest increase in house prices was seen in the Forth Valley, where house prices increased by 1.0%.

A summary of the average house price in Q1 2022 by Scottish region is included below. This also includes the annual change in the average house price in Q1 2022, as well as the annual change in the average house price using a rolling four quarter period to Q1 2022, which smooths out volatility in quarterly data (Source: RoS).

Source: Registers of Scotland