Scottish Housing Market Review Q3 2024

Key points

The Scottish Housing Market Review collates a range of previously published statistics on the latest trends in the Scottish housing market.

Sales

• Registers of Scotland data suggests that the fall in number of transactions has levelled off. There were 24,165 residential property sales registered across Scotland in Q2 2024 – relative to Q2 2023 this was an increase of 2.4% (575), which represents the first positive annual change since Q3 2021.
• This improving trend is supported by more recent Revenue Scotland data, which shows that over the 9 months to September 2024, Land and Buildings Transaction Tax (LBTT) returns were up by 4.9% compared to the corresponding months in 2023, although they remained 4.6% below the corresponding months in 2019.

House Prices

• Annual house price growth in Scotland was 4.0% in Q2 2024, which is the highest growth rate since Q4 2022, and above the long-run average since 2010 (2.6%) [Source: UK House Price Index (HPI)].

Private Rental Sector

• Growth in new-let rental prices (which are not subject to the current temporary modification to rent adjudication) remains below recent peaks: Citylets data shows that while annual growth in new-let rents in Q2 2024 (11.7%) was similar to Q1 2024 (11.5%), it was below its peak of 13.7% in Q3 2023. Furthermore, Rightmove data shows a decrease not only from its peak of 14.5% in Q3 2023, but also from 9.8% in Q1 2024 to 7.9% in Q2 2024. But the decrease in CPI inflation in Q2 2024 means that real-terms increases in new-let rents remain high.

Mortgage Lending

• New mortgage advances to first-time buyers in Scotland increased by 11.9% in Q2 2024, while for home movers the increase was 9.2%. [Source: UK Finance].
• Over the 8-month period up to August 2024, mortgage approvals across the UK have risen by 27% relative to the corresponding period a year earlier. [Source: Bank of England]
• The mean LTV ratio on new mortgages advanced to first-time buyers in Scotland rose from 80.9% in Q1 2024 to 82.3% in Q2 2024, which is close to its recent peak of 83.1% in Q2 2022. The mean ratio also increased for home movers, although at 69.5% in Q2 2024 it remained below its recent peak of 72.7% in Q2 2022. [Source: UK Finance]
• There has also been an increase in the share of all regulated residential lending across the UK with an LTV greater than 90%, which rose by 0.7 percentage points to 6.4%, which is close to its pre-covid peak of 6.8% in Q3 2019.
• After a small drop in recent months, the total number of mortgage products increased by 122 to stand at 6,645 in October, only slightly lower than the 6,658 products available in July 2024, which was a more-than-15-year high. [Source: Moneyfacts]
• The cut in Bank Rate from 5.25% to 5.00% in August appears to be feeding into advertised mortgage rates: the average 2-year fixed-rate mortgage has fallen from 5.77% on 1 August 2024 to 5.40% on 1 October 2024, while the average 5-year fixed rate mortgage has fallen from 5.38% to 5.07%. [Source: Moneyfacts].
• Following a steady increase over a 3-year period, the number of regulated mortgage accounts entering arrears in the UK has fallen for 3 consecutive quarters, although the total stock of mortgages in arrears continues to increase, with the share of the highest category of arrears (10% or more) comprising 0.29% of total loan balances in Q2 2024, compared to its post-covid average of 0.22%. [Source: FCA]. Meanwhile, there was a 35% increase in the number of buy-to-let (BTL) mortgages in arrears of 1.5% or more of the outstanding balance in the UK. [Source: UK Finance].
• In Q2 2024, the number of new regulated mortgage possessions in the UK increased by an annual 27.0%, although it remained below the quarterly average for 2019-20, prior to the pandemic; meanwhile, there was a 33% annual increase in new non-regulated mortgage possessions. [Source: FCA]. UK Finance data shows a 51% annual rise in BTL possessions across the UK in Q2 2024.

Homelessness

• There was a 4% increase in homelessness applications in Scotland in 2023-24, a 3% increase in the number of households assessed as homeless, and a 9% increase in households in temporary accommodation (as at 31 March 2024).
• Applications and assessments are at their highest since 2011-12, while the number of households living in temporary accommodation is at its highest since the time series began in 2002. [Source: Scottish Government]

Housing Supply

• All-sector new-build completions for the year to June 2024 totalled 19,293, 4,003 (‑17%) less than the year to June 2023. Over the same period, all-sector new build starts fell by 3,032 (-17%) to 15,296. [Source: Scottish Government]
• The 9,295 affordable housing completions over the year to June 2024 represents a decline of 14% (1,556 homes) compared to a year earlier. Whilst starts have also decreased over the same period, (by 10% to 6,422 homes), approvals have risen by 15% (900 homes) to 6,966. [Source: Scottish Government]

Housebuilding Material Prices

• The construction output-price index for new housing increased by an annual 3.4% in July 2024, down from a peak of 12.2% in June 2022. Annual growth in construction earnings (1.8% in July 2024) and material prices for new housing (0.2% in August 2024) also remained low. [Sources: UK Government & ONS]

Data to: 11 October 2024

Contact: Jake.Forsyth@gov.scot; Bruce.Teubes@gov.scot