News Review: Scotland
Scottish resilience
by Martin Ellis, head of housing economics, Halifax
reviewing the recent Halifax house price figures for the third quarter of this year, the average house price in Scotland stood at £140,719. in the uK market as a whole the comparable figure stood at £172,751.
Whilst this simple straightforward comparison might not
deal any surprises, a historical review of the two markets tells an interesting story. the past year has seen prices north of the border drop
3% from £144,878, compared to a 4% fall across the uK. this buoyancy is more prominent over a five year period when Scotland saw prices drop two thirds less than the uK’s average. compared to the third quarter of 2006, when the uK experienced a 9% fall, Scotland limited this to just 3%. However, it’s the decade long view that really demonstrates a
stark difference in the price behaviours of Scotland’s housing market and the rest of the uK. Since 2001, uK house prices have been boosted to the tune of 54% - from £112,292 to £172,751, a significant rise. in comparison, however, the average Scottish house price has nearly doubled (93% increase) over the same time period, from £72,860. Whilst these averages can provide a useful indicator of
market behaviour, Scotland is certainly not alone in harbouring significant regional variations. there’s a difference of just over £100,000 between the most expensive local authority region in Scotland – city of edinburgh (£205,274) - and the lowest average price in north ayrshire (£101,704). despite the overall dip in house prices since 2010, West
Lothian (+9%), aberdeen city, Perth and Kinross (both +6%) and Highlands (+5%) have all demonstrated some positive house price growth. one thing that has remained consistent across the entire
Scottish market is the improvement in mortgage affordability over the past five years. this, of course, is due not only to the change in house prices but also historically low mortgage rates. Looking at mortgage interest and capital repayments as a
percentage of monthly income, mortgages are least affordable in east Lothian (27.6%) and most affordable in east ayrshire (16.83%). east ayrshire has seen a 35% improvement in affordability in the past five years. on average across Scotland, mortgage affordability averages
21.8%. every single local authority area is more affordable that the uK average of 28.2%. of course, Scotland is not alone in behaving differently to
the ‘uK average’. a similar analysis across the uK will uncover some equally interesting quirks. However, the apparent hardiness of Scottish house prices, in uncertain times, is something that i’m sure homeowners in Scotland would like to see continue.
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