2023: an unusual year which defied expectations - David Alexander

4th Jan 2024
David J Alexander
2023: an unusual year which defied expectations - David Alexander - D. J. Alexander

In his latest column for The Scotsman, David Alexander reflects on the Scotland property market's performance in 2023.

The beginning of 2023 was a period of gloomy forecasts of a slowing housing market as the highest interest rates in 14 years were expected to have a negative impact on prices and the housing market. Well, nobody told the people of Scotland!

Despite our neighbours in England having a faltering year for activity with prices rising just 0.8 per cent in the nine months to September (the latest month for which there is data) the situation in Scotland was markedly more positive. Prices rose by 4.7 per cent to an average of £192,117 for the whole of Scotland which is a respectable rise in normal circumstances but when mortgage rates have been raised so much it is quite remarkable.

In Edinburgh, the price increase was 5.9 per cent putting the average at £344,814 while East Lothian had the highest increase of anywhere in Scotland rising an astonishing 8.9 per cent over a nine-month period. Look into the figures in more detail and you find that the average price of a detached home in Scotland is £348,703 which is an increase of £16,768 (5.0 per cent) over the period to September.

Detached homes in Edinburgh are now £794,830 (6.4 per cent up) and in East Lothian it will cost you £619,523 (9.9 per cent higher) which is an astonishing increase of £55,895 more in just nine months. This means that detached houses in East Lothian have been increasing by £1,433 per week during 2023.

My own firm had a record month of sales in May of £15m which is the highest ever figure in over 40 years. So residential sales in Scotland were very positive during 2023 defying market expectations. A less happy picture occurred in the private rental market. Here we experienced unprecedented demand with thousands of people seeking a diminishing supply of properties. This resulted in frustration for tenants and for landlords who found there were simply not enough homes to go round.

The situation in the private rented sector has been exacerbated by severe shortages in social housing and waiting lists soaring into the hundreds of thousands.

Unfortunately, this has led to housing emergencies being announced in Argyll and Bute, Edinburgh, and Glasgow. All three councils have had to admit that they cannot cope with the demand and their social housing supply is stretched beyond its capabilities.

The recent Scottish budget has done nothing to allay the fears and concerns of those seeking a home in the social housing sector. With a £200m reduction in the budget for building new homes in the social housing sector it is unlikely that the strains currently faced in the system will be alleviated in the near future.

Uncertainty over proposed legislation by the Scottish Government continues to hang over the private rented sector and this has been another year in which there has been too little consultation and not enough negotiation.

I would urge the Scottish Government to consult and liaise with all other parts of the housing sector to ensure that we can produce a collective response to the housing emergency engulfing so many of our fellow Scots. What is clear is that the current situation cannot be allowed to continue any longer, and that confrontation will achieve little while collaboration will produce results.

There was an easing of the timescale for the introduction of greener heating systems into the housing sector. This remains a problematic piece of legislation as it is clear that the costs are very high and the benefits to the individual have yet to be adequately explained.

The Scottish Budget allocated an additional £358m toward the costs of installing greener heating but with an estimated price of £33bn it is obvious that the homeowners and landlords are expected to foot the bill on this.

This was very much an unusual year which defied expectations. The housing market was buoyant in a good way while the rental sector was overstretched and undervalued. We need to develop a housing sector which works for all people from homeowners to tenants, from landlords to investors, from the private to the social rented sector. Only by working together will we provide enough quality homes for everyone.

*as seen in The Scotsman