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Prices keep rising despite high volumes of homes for sale

David J Alexander

The Scottish housing market continues to defy expectations. Not only do prices keep rising, but volumes also remain remarkably high. The usual assumption is that greater supply reduces demand and consequently prices will stabilise or even fall. In Scotland at the moment this is not the case.

While the situation varies in different parts of Scotland there remain very high volumes of properties for sale at the same time there are substantial increases in prices.

In Edinburgh, for example, there has been a 14 per cent year-on-year increase in the number of properties advertised for sale, rising to 2,383 between September 2023 and September 2024 – the highest monthly figure since July 2015. Despite this large increase in volumes, prices in the capital continue to rise.

Indeed, you might expect that such a large increase in the volume of properties advertised for sale might lead to longer average times on the market, but this has only increased by 4 per cent in Edinburgh over the last year, increasing from 96 days to 100 days for all property types.

Glasgow has had the same experience, increasing by 7 per cent in the volume of advertised properties with prices continuing to rise. The number of advertised properties is up 26 per cent in Dundee; higher by 33 per cent in Perth; although down 2 per cent in Perth; with a fall of 10 per cent in Aberdeen; and a dip of 14 per cent in Inverness.

So, the picture is mixed – and in the case of Aberdeen exacerbated by a long-term build-up of properties for sale so any reduction in the volumes will ultimately improve prices – but is generally more positive than might be expected for such large increases in the volume of properties advertised.

So, what is happening? What is clear is that there is no single answer to why this is proceeding but there are definitely parts of the Scottish market which are hot and attracting many more buyers than there are properties.

When you look around Edinburgh at the moment, particularly in the centre, there is building activity in every available plot of whatever size. From the enormous development on Dundas Street which will be worth hundreds of millions of pounds to tiny plots of half a dozen one-bedroom flats. Any sight that can be developed is being built upon.

This is a sign that demand is sky high and far exceeding supply. Edinburgh is benefitting from local buyers, from across Scotland, throughout the UK, and internationally. Its status as a global destination has never been greater and this is why, despite very high levels of housing supply, demand is outstripping this, and prices continue to rise.

Elsewhere Glasgow remains in a strong position with average prices rising 33 per cent over the last five years.

The ideal position for a housing market is to have a steady flow of properties for sale resulting in a moderate annual increase in prices over the long term. Enormous leaps in prices are generally never a good idea and the current position with the Scottish housing market is producing this with, as I said, some parts exceeding this due to external factors producing greater demand. Whether this is sustainable is open to question but at present this is a market that is doing well.

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