The boom in the Scottish housing market is slowing, and some think it is coming to an end, according to recent news reports. Figures in the latest quarterly housing report from Lloyds TSB Scotland, as reported by the BBC show a slowdown in price increases, but an increase overall.
The second quarter of 2007 saw prices fall in Glasgow by 1.2% and Aberdeen by 1.4%. In the south east outside of Edinburgh, home prices fell by a whopping 10% in the quarter. Excluding Glasgow, prices in the south west fell 2.5%.
The average price for a home throughout Scotland is £140,262, which is still well below the UK average of £196,525. The affordability of housing in Scotland is one reason for its recent climbs as more and more people look to buy homes. It also should keep the market from seeing any major declines. While the market is definitely slowing, the outlook across Scotland is still solid with no major drops expected. For the quarter, housing prices in all of Scotland rose by .6%.
Economist Tim Crawford was quoted by the BBC on the situation in Scotland: “Over the past year Scotland has seen the strongest house price growth in Britain, an increase of almost 16%. Despite recent price increases, Scotland is still the most affordable part of the UK by a wide margin.”
Overall, Edinburgh remains the most expensive city in Scotland for housing, with an average price of £228,087. Aberdeen is next at £200,141. These are the only cities in Scotland with an average price above £200,000. Aberdeen also saw the largest increase in prices over the past year, rising by 32% between July 2006 and July 2007.
Average price of a rural property in Scotland is 5.8 times average annual earnings, compared with 5.2 times in towns and cities. This has created a situation in Scotland where there are far fewer first-time buyers in rural areas – just 18 per cent – than in urban areas, with 31 per cent.
Martin Ellis, chief executive at the Bank of Scotland, said: “Those living in rural areas face particularly tough housing market conditions. In general, higher average property prices, together with lower earnings, mean housing is less affordable than in urban areas.
The Scottish Borders has the lowest proportion of first-time buyers, at 16 per cent. East Lothian is second with 21 per cent, while Argyll and Bute and Aberdeenshire come joint third with 22 per cent.
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