Location plays a key role in property price increases - David Alexander
In his latest column for The Scotsman, David Alexander discusses the effect location has had on property prices after it was revealed that average home prices have risen by almost £1,000 each month for nearly four years.
The growth in the price of property in Scotland since the start of the pandemic in March 2020 has been little short of miraculous. It was anticipated this would be a time of considerable uncertainty for housing but has turned out to be one of the most prolonged periods of growth the market has experienced in decades.
People may have been unsure about many aspects of their lives but what is clear is that individuals continued to buy houses, to place their future security in homeownership, and create a market which has boomed in the years since the pandemic began just under four years ago.
The latest official figures since the pandemic began, which run for the 45 months from March 2020 to November 2023, show that average house prices have risen by £43,381 to reach £194,006. This means that average home prices have risen by almost £1,000 each month for nearly four years.
Of course, the average price increases vary widely from the highest of £101,816 in East Lothian to the lowest in Aberdeen which has actually seen a decline in prices of £778. While in between you have East Renfrewshire rising by £79,734; Edinburgh up by £70,612; Highland increasing £46,179; Glasgow £42,299 higher; and Dundee up £26,681.
What these figures show is we have geographic pockets of growth which are doing very well and are outpacing much of the rest of Scotland. We also have property types where prices are soaring ahead.
It is among detached homes that the largest increases have been recorded as the appeal of outdoor space provided by larger properties continues to push the top end of the market and this trend – begun during the early days of Covid – seems to be unstoppable.
The average price of a detached home in Edinburgh rose by £215,370 in the 845 months since Covid and now stands at £801,543. East Lothian saw the second highest increase in average price for a detached home rising by £209,035 to £607,717.
East Renfrewshire detached homes have risen to £574,701; Glasgow is at £480,063; while East Dunbartonshire is £498,049. The Scottish average price for a detached home rose by £98,906 to reach £359,179.
This means that an average home in Edinburgh is now more than £150,000 greater than the average for the whole of Scotland and for detached homes it is more than £400,000 greater. The property market in some parts of the country seems to be growing at a much greater rate than the rest of Scotland, which could be a concern in the coming years.
The risk is that we are creating a two-tier property market between some parts of Scotland and the rest. Where prices are rising so steeply that some of these areas may become simply unaffordable to a large part of the population. However, this trend may slow as property and personal taxes continue to soar but there is little doubt that parts of Scotland’s property market are experiencing something of a boom at present.
While all these figures indicate a buoyant market there must be a point at which affordability comes into play. Though there are plenty of well-paid jobs in our major cities and many people who wish to move to rural and remote Scotland there must be a limit to how much buyers are willing to pay for a property.
Market forces usually play their part in controlling prices, but for the moment there seems to be an alternative economy operating in parts of Scotland which are boosting property prices to new highs. The coming year will be crucial in establishing whether this is a long-term trend or a momentary blip.