Scottish Housing Market Review: Q2 2023

2. House Prices

Scottish House Price Performance: National

Source: Registers of Scotland / UK HPI

Average house prices in Scotland, as measured by the UK House Price Index (HPI), increased in Q1 2023 by 2.0% relative to Q1 2022. This is down from the recent peak of 13.3% in Q3 2021, and represents the slowest rate of house price inflation since Q3 2020 and is also slower than the average annual quarterly change between 2010 and 2023 (2.9%). The average property price (geometric mean) in Scotland stood at £184K in Q1 2023. More recent monthly data (which tends to be more volatile than the quarterly averages) for April 2023 similarly shows an annual increase of 2.0%.

Data from Registers of Scotland also suggests annual house price inflation slowed in Q1 2023. However, the rate of inflation was higher than the UK HPI measure at 3.8%. Registers of Scotland data is not mix-adjusted, so will be affected by the composition of properties sold. The average (arithmetic mean) house price in Scotland as at Q1 2023 according to Registers of Scotland data was £210K.

UK HPI data shows that annual price growth to Q1 2023 was highest for detached properties (3.7%). Flats increased by the lowest amount (0.2%).

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 2022, the average Scottish new build property price increased to a greater extent than the existing build price, rising by an annual 11.8% to £285K. The average existing build price rose by 4.6% to £184K. The large rise in new build property prices can be partly explained by the large increase in new build construction material prices (see Chart 11.3).

Source: UK HPI (Scotland)

The UK HPI also shows that the average price of a property bought by former owner occupiers in Scotland increased by an annual 2.4% in Q1 2023, to £223K. Meanwhile, the average price of a property purchased by a first-time buyer increased by an annual 1.6% in Q1 2023, to £147K.

Scottish House Price Performance: Regional

Registers of Scotland data show that house prices increased over the one year period to Q1 2023 for all regions in Scotland, although to a varying extent. The largest increase was in Argyle & Bute and Highlands & Islands, where house prices increased 6.5% annually to 216K (average arithmetic mean price; prices not mix-adjusted). The smallest increase was in Aberdeen/shire and Moray, where prices increased by 0.4% annually to £198K.

The longer-term trend (as measured by the change in house prices over the four-quarter period to Q1 2023 over the previous four-quarter period) also shows that house price growth has been positive in all areas of Scotland. The strongest price growth was seen in Edinburgh, Lothians and the Borders, where house prices increased by 11.4%, whilst the smallest increase in house prices was seen in Forth Valley, where house prices increased by 1.1%.

A summary of the average house price in Q4 2022 by Scottish region is included below. This also includes the annual change in the average house price in Q1 2023, as well as the annual change in the average house price using a rolling four quarter period to Q1 2023, which smooths out volatility in quarterly data (Source: Registers of Scotland).

Table 2.1 Regional house prices

Aberdeen/shire and Moray

Average Price – Q1 2023 £198K

12 Month Change 0.4%

Annual change (rolling 4 quarters) 1.3%

Edinburgh, Lothians and Borders

Average Price – Q1 2023 284K

12 Month Change 4.9%

Annual change (rolling 4 quarters) 11.4%

Argyll & Bute and Highland & Islands

Average Price – Q1 2023 £216K

12 Month Change 6.5%

Annual change (rolling 4 quarters) 9.8%

Forth Valley

Average Price – Q1 2023 £200K

12 Month Change 6.2%

Annual change (rolling 4 quarters) 1.1%

Ayrshires and Dumfries & Galloway

Average Price – Q1 2023 £165K

12 Month Change 1.6%

Annual change (rolling 4 quarters) 6.0%

Tayside and Fife

Average Price – Q1 2023 £193K

12 Month Change 3.3%

Annual change (rolling 4 quarters) 7.0%

Clyde Valley

Average Price – Q1 2023 £190K

12 Month Change 4.1%

Annual change (rolling 4 quarters) 8.9%

Scotland

Average Price – Q1 2023 £210K

12 Month Change 3.8%

Annual change (rolling 4 quarters) 7.1%

Source: Registers of Scotland