August 2022 Real Estate Market Update
Average house prices in Scotland continue to grow past record £200,000
House prices across the UK saw their first decline since June 2021, albeit by a slight 0.1% in July, but the Scottish property market continues to see a spike in house prices, with an annual growth rate of 9.6% since the start of 2022.
According to the Halifax House Price Index, the average cost of a property in Scotland topped £200,000 for the first time in June, reaching £201,549 – an increase of £18,142 on the same period in 2021, and the trend continued in July with homes now costing an average of £203,677.
While the surge in prices is undoubtedly good news for sellers, those looking to move face a tough seller’s market, according to Russell Galley, general manager in Halifax. Scotland, however, continues to boast some of the most affordable areas in the UK, with Northern Ireland and Wales enjoying similar annual house price steps of 14.7% and 14, 0%, respectively.
The real estate market remains largely unaffected by the cost of living crisis
Despite the growing cost of living crisis, the UK property market continues to be largely isolated, with unfettered price growth and persistent large-scale demand.
According to Galley, this can be explained by the fact that low-income households bear most of the pressure of rising costs. Meanwhile, high-income households continue to be active in the market, with mortgage lending at its highest level since September 2021, suggesting a rush to fixed mortgage rates ahead of expected interest rate changes. In the coming months.
Galley argues, however, that inflation-induced pressure on households will certainly increase, affecting affordability and likely slowing the market further before the end of the year.
Supply and demand issues continue to drive home prices higher
Despite reports that post-COVID market growth will soon collapse, the Scottish property market has defied all expectations. In June this year, house prices saw a 1.8% month-over-month rise in the average sale price – the biggest monthly rise since 2007. While prices rose 13 %, the highest growth rate since 2004 according to the Halifax House Price Index.
Supply and demand issues continue to be the main cause of rising house prices, as demand far outstrips the properties available on the market. According to Zoopla, although UK-wide housing demand has slowed steadily throughout 2022, it remains 25% above average.
As sellers continue to finalize the purchase of their next home before closing the sale of existing properties and as buyers race to beat rising mortgage interest rates, these issues are likely to persist.
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