Time for a summer Scottish property market review from Heathhall Business Centre.
And before we kick off, if you’re moving house, Dumfries Self Storage offers the perfect self-storage facility – secure and flexible solutions aplenty for all your furniture and belongings should you need an interim fix or you’re renovating!
And once you’re in your new place, why not kit your windows out with a little help from Blinds by Mark McGowan
Or if it’s a spot of joinery you’re after, it’s Heathhall’s very own Bruce McGarva Joinery to the rescue! Likewise Jim Dalziel Plumbing & Heating and JJ Plumbing & Bathrooms!
Inflation and UK housing affordability
The latest figures from the Office of National Statistics tell us that UK-wide property inflation leaped to 12.4% in the year to April, up from a 9.8% increase in March. Meanwhile, UK inflation – the rate at which prices are rising – has jumped to 9.4% in year to June. A 40-year high!
But at the same time, UK housing affordability now at its most stretched, because property price inflation is outpacing earnings.
The silver lining to this cloud is that Scottish locations dominate the list of most affordable local areas: Inverclyde is the most affordable place to buy a home, with typical house prices just 3.1 times average earnings.
Average home prices: Scotland showing one of largest growths
These figures from the ONS also reveal that the average home was worth £281,000 in April, £31,000 higher than this time last year.
Scotland (and Wales) reported the largest growth over the year – a 16.2% rise in both countries to reach an average price of £188,000 and £212,000 respectively.
Industry reaction
Lower house price inflation in Scotland and Northern Ireland
“Just when it seems that house price growth is starting to slow, along come these figures showing an almost 3% rise on last month,” said Iain McKenzie, CEO of The Guild of Property Professionals.
“The average home now costs over £30,000 more than it did this time last year, but with sluggish wage growth and lower disposable income, it may feel like the goal posts have been moved for first-time buyers.
“The market may not be running away for everyone though, with parts of Scotland and Northern Ireland experiencing lower house price inflation.
“Estate agents are still seeing an imbalance between supply and demand, with potential buyers queuing up as soon as properties come up for sale. When this eventually begins to narrow, we may see house prices cool down to more achievable levels.”
Increased nervousness about taking on debt
Said Jeremy Leaf, chairman of the Royal Institution of Chartered Surveyors (Rics):
“We are seeing increasing nervousness about taking on debt at a time when buyers and sellers have no real clue as to when and how the rising cost of living will start to level out.
“Nevertheless, continuing lack of choice and strong employment prospects means there is still little chance of significant price changes over the next few months at least.”
Figures reported on a lag
Michael Bruce, CEO and founder of Boomin, added:
“It’s important to remember that while sold prices provide the most concrete health check of the UK property market, they are reported on a lag.
“So while the market remains apparently unphased by a spate of base rate jumps and consequential impact this is likely to have on the spending power of UK buyers, the reality is that this declining market sentiment is yet to bubble to the surface.
“However, while these growing economic headwinds may rock the boat of house price growth, sustained and robust levels of buyer demand, coupled with a shortage of stock, are sure to prevent a significant drop.”
First-time buyer affordability taking a hit
The first-time buyer house price ratio in the UK is 5.6 times average earnings, compared to home-movers at 8.5.
First-time buyers also saw a squeeze in affordability as prices rose quickly during the pandemic, increasing the challenge of raising a suitable deposit without the benefit of a corresponding increase in the value of an already-owned property.
A sizeable number of first-time buyers will be joint applicants able to draw on two salaries, or they might benefit from other sources of funds – the bank of mum and dad being the most common one for those that are lucky enough!
This is all compounded by the fact that the average first-time buyer is now 32-years-old – three years up on a decade ago – making them more likely to be established in work than at any time previously. So we must factor in the potential for higher earnings here in other words.
Sources:
bbc.co.uk
propertyindustryeye.com
lloydsbankinggroup