Extraordinary price rises underline the need for new homes

In the previous five years between January 2015 and December 2019 the increase was only 11.4 per cent so there has been a substantial shift in the market since the start of the pandemic. There are, of course, other factors but it does look as if the pandemic fired the starting gun on price growth in Scotland’s housing market.

The areas which have experienced the largest percentage growth are all located in and around the Central Belt and outside Edinburgh and Glasgow. Across Scotland there were substantial variations in price rises, with Glasgow recording the highest increase over five years with a rise of 37 per cent; followed by East Lothian on 35.1 per cent; Midlothian at 34.3 per cent; Stirling at 34.2 per cent; and West Lothian by 33.6 per cent.

The pandemic focused minds on what people want from their home with more space inside and a garden outside. It focused people’s minds and changed the dynamic between work and home life. So many more people work from home now that they obviously feel they want their houses to be as comfortable and as convenient as possible.

Couple that with still needing to come into the office at some point during the week and you have an explosion of prices in and around our major cities in the Central Belt.

The largest growth in prices has been in the areas of the Central Belt surrounding our main cities. This would indicate that, while more people are working from home and want to enjoy larger homes with outside space, they still need and want to have access to larger cities and towns both for work and leisure purposes.

The areas with the highest average prices over the last five years are East Renfrewshire, East Lothian, Midlothian, Edinburgh, and East Dunbartonshire. Prices in East Renfrewshire have risen by £77,089 in the last five years, which is the equivalent of £296 a week.

While these figures highlight a Scottish housing market in rude good health it also underlines that not enough new homes are being built to cope with demand. Price increases on this scale – which are higher than England and Wales – are occurring because demand is far outstripping supply.

For many existing homeowners this may sound like good news but, given wage rises have been quite sluggish in recent years, this can produce a fairly stodgy market with people unable to get on the housing ladder initially, and then unable to move up to more expensive properties because prices have outstripped income.

Price growth is positive in the housing sector, but it needs to be coupled with a steady flow of new properties to ensure that demand does not outpace supply. What we need is an increase in the volume of new houses being built in the areas with the highest demand so that homebuyers can have an affordable place to live now and in the future.