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Tuesday, March 07, 2017

The Market Fails Again

There has been a further deterioration in home affordability in Scottish cities with prices up 3%.

The average price in cities has now risen from £181,061 in 2016 to £186,002 in 2017, according to the figures from the Bank of Scotland and this has resulted in average home affordability in Scotland’s cities worsening in the last 12 months from 5.2 to 5.3 times gross average earnings. It is the fourth successive annual decline in home affordability and affordability in Scottish cities is, on average, now at its worst level since 2009.

Edinburgh is once again Scotland’s least affordable city with an average house price of £236,136 which is six times annual gross average earnings. Other expensive cities include Aberdeen and Perth at 5.7, and Dundee and Inverness at 5.5. Perth has recorded the biggest price rise of any Scottish city over the past decade with a gain of 31% between 2007 and 2017, compared to the UK cities average of 21%. Edinburgh, Inverness and Aberdeen had the next highest price rise, with all seeing a gain of 16%. Perth house prices have seen the strongest recover since the economic downturn. Over the past five years, Perth has recorded the highest house price growth with a rise of 27%. Dundee has the second highest increase in average house price with growth of 25%, closely followed by Glasgow at 23%.

Stirling is the most affordable city for home buyers in both Scotland and the UK with an average price of £173,848 which is 3.7 times average gross annual earnings. This is much lower than the UK cities average of 6.9.

 ‘Rents and house prices are continuing to rise as demand outstrips supply, meaning many individuals and families are facing growing pressures and aspirations are being stifled,’ said Homes for Scotland, chief executive Nicola Barclay. ‘With housing production having fallen by 40% since 2007, but the number of households rising, it is vital that we see the bold action and investment needed to provide enough homes of the right types in the right locations to meet the diverse housing needs of our growing population.’

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