Press Release Summary: It\'s official: Scotland is now the most resilient property market in the UK. The latest quarterly survey of UK house prices showed that while the national rate of annual house price inflation is 2.2 per cent, Scotland is speeding ahead at nearly three times the pace on 6.3 per cent. With London seeing its first quarter-on-quarter fall since 2005 to leave it on 5.6 per cent, the top market for house prices is at the top end of the UK.
Press Release Body: It\'s official: Scotland is now the most resilient property market in the UK. The latest quarterly survey of UK house prices showed that while the national rate of annual house price inflation is 2.2 per cent, Scotland is speeding ahead at nearly three times the pace on 6.3 per cent. With London seeing its first quarter-on-quarter fall since 2005 to leave it on 5.6 per cent, the top market for house prices is at the top end of the UK.
Affordability has been a major factor in the situation, according to Nationwide\'s chief economist, Fionnuala Earley. She said: \"In the past we have alluded to the fact that Scotland mortgage property affordability is not as stretched in Scotland as in other parts of the UK and this is likely to be the main factor behind the relative resilience of Scottish house prices.\" She added that despite outpacing England and Wales for growth since 2003, Scottish prices are still only 84 per cent of the national average (£149,834 compared with £179,363).
In such circumstances, one might imagine that buy-to-let could be missing out In Edinburgh and Glasgow, Aberdeen and Dundee. But not so, according to Diarmid Mackenzie Smith, lettings manager for property agency Rettie Co.
Mr Mackenzie Smith explained that rental demand has started growing in Scotland as a consequence of the credit crunch and the declining availability of mortgages. Better affordability may be little use if the right deal at the right oprice is not available.
He said: \"With the effects of the so-called credit crunch, first-time buyers will now come back into the rental sector which will explain the increase in rental demand and signs of rental increases that have recently been experienced.\"
This increase, or \"firming up\" as Mr Mackenzie Smith put it, has seen the market move on from its traditional base in Edinburgh, which has concentrated on one and two-bedroom flats. \"Depending on many variables such as the style, the quality and location, these investments have achieved rents ranging from £650 upwards for a two bedroom flat, producing yields in the region of three to four per cent,\" he said.
Now, however, there are upmarket properties going at higher rental rates, such as the Quartermile Development, which has been \"achieving rents of as much as £1495 per calendar month for two-bedroom flats in this high quality development\", he noted.
He concluded that landlords would be happy to see this \"long overdue\" boost to the market, \"which will provide a much needed boost to this sector and will undoubtedly encourage further investment\".
Many have associated buy-to-let with a lack of affordability, as if landlords are to blame for all the demographic, economic, planning and structural issues that affect the balance between supply and demand in the housing market. Yet in Scotland it appears that buy-to-let is not moving ahead because of a lack of affordability, as the average price is lower than every other UK standard region except the north.
Instead, it has been a consequence of a lack of mortgage availability that is common everywhere.
The net result appears to be, at least for now, a balance between buy-to-let growth, rising prices and affordability. The current property market climate is a very long way from being ideal, but in Scotland it may be nearer to offering the best of all worlds than anywhere else in Britain.
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2025
