SUMMER 2022
THE
PROPERT Y MARKET A REVIEW OF THE KEY TRENDS IN THE N AT I O N A L A N D L O C A L H O U S I N G M A R K E T
SCOTLAND Analysis by Dataloft
MIXED MESSAGES
SA LES
9.8%
12.1%
14.5%
8.6%
23.1%
House prices
Property sales
Mortgage approvals
New private homes built (completed)
Gross mortgage lending
£253,506March 2021 vs £278,436 March 2022
121,410 April 2021 vs 106,780 April 2022
82,717 March 2021 vs 70,691 March 2022
65,155 Q2 2020 vs 59,524 Q2 2021
£34.4bn* March 2021 vs £26.5bn* March 2022
Source: Bank of England, HMRC, ONS, DLUHC, HomeLet *Figures rounded to nearest £0.1bn
WHILE AN ECONOMIC STORM IS BRE WING , THE PROPERT Y MARKET CONTINUES TO BE BRISK AS A SHORTAGE OF PROPERTIES TO SELL CONTINUES TO UNDERPIN MARKET AC TIVIT Y.
BRISK MARKET
A PERFECT STORM
SLOW GEAR CHANGE
The housing market remains busy. Compared to the last ‘normal’ market of 2019, buyer enquiries are up 31% and mortgage approvals and sales are up by 12% and 11% respectively. However, there are half as many properties available to buy and stock levels are down 55% (Rightmove, HMRC, Bank of England). The prolonged mismatch between demand and supply continues to support prices. On average, properties are selling subject to contract in just 31 days, the quickest time ever recorded. With competition for properties remaining high, Rightmove report that asking prices have hit their fourth consecutive record high in as many months.
Economic headwinds are gaining momentum. Expectations of global and UK economic growth have been pared back, while consumer confidence has plummeted to its lowest level since records began in 1974. Optimism is weaker than during the global financial crisis, Brexit or Covid-19 (GfK). The Covid recovery, war in Ukraine and rising energy and food prices, alongside a strong labour market and low unemployment, have created a perfect storm. Inflation is pushing a 40-year high. Thanks to fixed-rate mortgages, many households are cushioned from the impact of the latest base rate rise, but day-to-day budgets are increasingly feeling the squeeze.
For many, the question is when, not if, the property market will start to moderate. However, any gear change is liable to be slow and steady, and not an emergency brake as was the case in the global financial crisis of 2008. Forecasters still anticipate positive price growth over the course of the year. Market fundamentals remain strong. A strong desire to move remains in the minds of many and there is a shortage of properties, compounded by data indicating that new home completions remain below pre-Covid levels and short of the government’s 300,000 homes target.
2 | SCOTLAND HOUSING MARKET UPDATE
Summer 2022
LETTINGS
9.5% £1,091 Average rents
Average monthly rent across the UK
April 2021 vs April 2022
April 2022
RENTAL RECORDS Rental values continue to rise across all regions of the UK, the average rent per calendar month reaching a record high of £1,091 (£920 excluding London). Demand remains considerably higher than a year ago, with a shortage of properties to let meaning properties are letting quickly, on average in just 14 days (Zoopla). Unsurprisingly, areas with the most shortages have seen more substantial price growth. While the majority of agents now expect rents to rise into the summer, affordability constraints may act as a ceiling for further growth as the year progresses.
31 days
The property market, in both sales and rentals, is currently showing few signs of the impact of the cost of living crisis that is making daily headlines. However, affordability concerns are likely to become more pertinent as the year progresses.
NICKY STEVENSON MD, FINE & COUNTRY UK
AV E R AG E T I M E TO S E L L A PRO PE RT Y Source: Rightmove (marketing to SSTC)
Analysis by Dataloft
SCOTLAND HOUSING MARKET UPDATE | 3
CELEBR ATING 70 YEARS HOME IS WHERE THE HEART IS Average house price
£1,981 1952
£12,689
£52,663 Ruby 1992
Silver 1977
£103,501 Gold 2002
£164,055 Diamond 2012
£267,620 Platinum 2022
70 YEARS
SEVENTIES BOOM
70 YEARS TO 70 MILLION
This year the nation celebrates 70 years of service from Queen Elizabeth II, following her ascension to the throne on 6 February 1952. Back in 1952 the average price of a property was only £1,981 or just below £60,000 in today’s money¹. Today the average price of a property in the UK is £267,620, over four times that figure.
Since the market lockdown two years ago, average property prices have risen by nearly 20%. However, this is not the greatest gain witnessed in the past 70 years. Average prices rose by over 40% year-on-year towards the end of 1972. The 1970s saw a boom as mortgages became more widely available, the average price of a property quadrupling over the decade.
In 2029, 70 million are set to call the UK home. The population has risen by 17.5 million to date during the Queen’s reign, from 50.4 million to an estimated 68 million². Back in the 1950s, the indoor toilet was the revolution in house building. Today energy efficiency is rising to the fore.
¹Adjusting for inflation, ²Office for National Statistics
4 | SCOTLAND HOUSING MARKET UPDATE
Summer 2022
NATIONA L M A R K ET CONDITIONS The average price of a home in the UK is now nearly £47,000 more than in March 2020. This compares to a rise in price of less than £9,000 in the two years previously (Dataloft, UK HPI). Monthon-month price growth continues across nearly all regions of the UK, all the main property price indices indicating the annual rate of price growth remains firmly in positive territory.
House price growth
The average price of a property now equates to over eight times current average annual earnings. With earnings growth failing to keep pace with property price rises and cost of living increases, the relative affordability of property is rising up the agenda (ONS).
Less than 9.0% 9.0% to 9.9% 10.0% to 10.9% 11.0% to 11.9% 12.0% and over
S C OT L A N D
8.0%
Source: Dataloft, ONS, UK HPI (March 2022)
NORTH E AS T
NORTHER N IREL AND
10.4%
8.7% 9.7% 9.0%
NORTH WES T
YO R K S H I R E A N D THE HUMBER
E AST MIDL ANDS
12.4% 10.3% 10.9% 11.7%
ANNUAL CHANGE IN HOUSE PRICES AND TRANSACTIONS
WEST MIDL ANDS
250%
WA L E S
200% 150% 100%
SOUTH E AST
50%
SOUTH WEST
0% -50%
EAST OF ENGL AND
MAR 21
APR 21
MAY 21
House prices
JUN 21
JUL 21
AUG 21
SEP 21
Transactions
OCT NOV DEC 21 21 21
JAN 22
FEB 22
MAR 22
10.9%
11.7% LO N D O N
4.8%
Source: Dataloft, ONS, HMRC, UK HPI (March 2022)
Analysis by Dataloft
SCOTLAND HOUSING MARKET UPDATE | 5
R EGIONA L ACTI V IT Y SCOTL A ND Over 433,000 homes in the UK changed hands in the first four months of 2022, making this the third busiest start to a year since 2007. Last year was an exceptional year due to Covid-19 and 2016 saw a surge prior to the introduction of the 3% additional homes surcharge. Except for last year, April 2022 has been the busiest since 2007 (Dataloft, HMRC).
Scotland has seen the highest rate of property turnover of any region in the UK over the past year. Midlothian, the City of Glasgow and Renfrewshire are currently the most active housing markets in the region.
Orkney Shetland Islands
Na h-Eileanan Siar
Moray Highland
Aberdeenshire
Aberdeen City
% of Private Stock Turnover Less than 4.5% 4.5%-5.49% 5.5%-5.99% 6.0%-6.99% 7.0% and over
Source: Dataloft, ONS, UK HPI (March 2022). Contains OS data @Crown copyright and database right 2016.
Angus Perth and Kinross
Dundee City West Dunbartonshire East Dunbartonshire
Argyll and Bute
Fife
Stirling
Clackmannanshire Inverclyde
N.B. Stock levels relate to 2011 Census data. Some areas have seen increased amounts of new development activity since then, which will enhance turnover.
Falkirk Glasgow City
City of West Edinburgh Lothian Midlothian
East Lothian
South Lanarkshire
North Ayrshire
Scottish Borders
East
Ayrshire Renfrewshire East Renfrewshire North Lanarkshire
South Ayrshire Dumfries and Galloway
Market activity still above pre-pandemic levels 6 | SCOTLAND HOUSING MARKET UPDATE
Summer 2022
19.2% Falkirk
C U R R E N T A N N UA L R AT E O F PR I C E CHANGE (%)
Prices remain firm Double-digit property price growth remains evident in many localities in Scotland, although annual price growth has moderated slightly compared to a year ago (ONS, UK HPI). Across Scotland there is less than two months of available stock left to sell, down by almost half on the historical norm.
Source: Dataloft, ONS, UK HPI
CURRENT ANNUAL RATE OF PRICE CHANGE (%) RANK
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
FALKIRK CLACKMANNANSHIRE EAST AYRSHIRE EAST LOTHIAN NA H-EILEANAN SIAR MIDLOTHIAN ARGYLL AND BUTE SOUTH LANARKSHIRE WEST DUNBARTONSHIRE SCOTTISH BORDERS FIFE CITY OF EDINBURGH WEST LOTHIAN HIGHLAND EAST RENFREWSHIRE NORTH LANARKSHIRE ORKNEY ISLANDS DUMFRIES AND GALLOWAY MORAY RENFREWSHIRE
Source: Dataloft, ONS, UK HPI (March 2022)
Analysis by Dataloft
CURRENT ANNUAL RATE OF PRICE CHANGE (%)
AVERAGE HOUSE PRICE
19.2 17.0 16.2 16.0 15.0 14.2 14.0 13.9 13.6 13.3 13.1 13.0 12.3 11.9 11.9 11.8 11.4 10.9 10.6 9.7
£161,602 £161,115 £122,017 £288,178 £152,593 £226,996 £183,707 £158,931 £133,734 £193,061 £166,962 £322,855 £195,055 £202,909 £282,390 £132,532 £182,924 £158,930 £181,221 £145,804
2 months
P RO P E RT Y S TO C K L E F T TO S E L L I N S COT L A N D Dataloft, TwentyCi
GEARING UP A survey by the Home Builders Federation has revealed that over 70% of people would be persuaded to buy an electric car if their home had an electric vehicle charging point. With rising fuel prices impacting many households, data reveals that over one in five vehicles registered to date in 2022 has been battery electric or a plug-in hybrid, up from just 14% a year ago¹. There are now nearly 20,000 public charge points across England, Scotland and Wales, up from less than 3,500 just five years ago².
71%
WO U L D CO N S I D E R A N ELECTRIC CAR IF THEIR HOME HAD AN ELECTRIC VEHICLE CHARGING POINT Dataloft, Home Builders Federation
¹SMMT, ²Dataloft, Ordnance Survey
SCOTLAND HOUSING MARKET UPDATE | 7
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Analysis by Dataloft
Dataloft is an established property market intelligence company with a long track record of analysing and reporting on the housing market. We are committed to stripping away the mystique of complex data analysis and adding value for clients through interpretation, insight and creativity. dataloft.co.uk | dataloftinform.co.uk
Disclaimer: This report is produced for general information only. While every effort has been made to ensure the accuracy of this publication, Dataloft Ltd accepts no liability for any loss or damage of any nature arising from its use. At all times the content remains the property of Dataloft Ltd under copyright, and reproduction of all or part of it in any form is prohibited without written permission from Dataloft Ltd. Date of publication: June 2022 Analysis, editorial, design, graphics and charts by Dataloft.