New report suggests Scottish housing market is ‘subdued but still performing’

Rettie & Co. is forecasting that Scottish housing sales transactions will drop by around 15% over the course of the year, with average house prices set to fall back by around 5%.

The firm characterised the Scottish housing market as now ‘more complicated and expensive’ in its summer housing market report.

Dr John Boyle, Rettie & Co’s director of research and strategy, said, “When you add rising interest and mortgage rates to slower or negative house price growth, the picture is far from rosy for households in Scotland. However, the market is continuing to function even if at a slower pace.

“On the rental side, the reduction in supply combined with increased demand, set against an unhelpful legislative environment, is seeing a steep rise in advertised rents and a lack of availability.”

The main findings in Rettie & Co’s Summer Briefing Report are:

• Scottish housing sales were down 10% in the first five months of 2023 against the previous year, with the rate of house price rises also falling. Steeper adjustments are expected over the course of 2023 as interest rate rises take effect.
• Although sales have slowed, there remains an appetite for people to sell. The value of properties being listed is broadly comparable with last year, although sales will take longer in the slowing market.
• Over the last three months, the supply of new properties coming to the market in Edinburgh is approximately 10% higher than the same period last year, while, in Glasgow, supply has followed the downward trend in registered sales, falling back by approximately 14% year-on-year.
• The main challenge in most parts of the market is the rising cost of mortgages.
• The average cost of a mortgage on a Scottish property is now higher than the average rent.
• A period of slower or negative house price growth, with material and labour costs remaining high, will slow down housing delivery, likely leading to subdued new build activity.
• Rent increases for newly advertised properties are being driven by strong competition for a smaller supply of available housing.