The latest Scottish House Price Monitor from Lloyds TSB Scotland suggests that Scottish house prices are almost identical to four-and-a-half years ago. But in the three months to the end of July, the quarterly price index for the average domestic property in Scotland fell by 3.7 per cent.
The average Scottish house price is now £152,565, though there are wide variations across the country. With an average price of almost £230,000, Edinburgh remains the most expensive part of Scotland in which to buy a house, with Aberdeen second at nearly £208,000.
By contrast, the areas around Perth and Kinross and stretching west into the old Central Region are the most depressed, with an average price of just over £127,000, followed by Glasgow at around £130,000. However, there is some encouragement from an increase in activity in the housing market which had been very low during the winter months.
These latest figures show what the report calls a “sizeable increase”, with the number of houses purchased recorded 27 per cent up on the previous quarter – though these are still well below pre-recession figures.
Donald MacRae, the chief economist at Lloyds TSB Scotland, said that the Scottish economy “exited recession at the end of 2009 with a rise in output of 0.1 per cent. After four quarters of rising output, gross domestic product fell in quarter four at the end of last year, followed by a slight rise of 0.1 per cent in the first quarter of 2011.
“Consumer confidence remains low due to high levels of retail price inflation in excess of increases in earnings squeezing disposable income,” he said. “The Scottish housing market did experience the normal effect of spring this year on sales and purchases, but the impact was muted. The number of transactions increased from the depressed levels of winter but remained below the levels of one year ago. The Scottish housing market awaits a resurgence of both business and consumer confidence for a faster recovery.”
One option for people looking to enter the housing market could be through low cost home-ownership schemes (LCHO). Another report, this time from the Halifax, points out that such schemes have faced significant challenges since the recession, but are a vital part of the housing market, especially in the provision of affordable homes.
In the last five years, almost 45,000 new homes have been built under various LCHO programmes. And last year, the number of new LCHO homes represented around 13 per cent of total private enterprise and housing association sales. The concept includes helping people to enter the housing market through shared equity and shared ownership.
This has been promoted by governments of various political persuasions as a way of supporting those families and individuals who couldn’t afford to buy on the open market without assistance.
However, even those schemes are pointless without homes for people to buy and a Progressive Scottish opinion poll suggests that building new homes for those on housing waiting lists is the Scottish public’s number one priority when it comes to investing public money in the construction sector.
In the poll, commissioned jointly by the Scottish Building Federation and the Chartered Institute of Building Scotland, 39 per cent of those surveyed identified investment in new housing as their top priority for public capital investment.
Building new schools and repairing existing ones came out top of the second priority list, supported by 25 per cent of respondents, while building new hospitals was the most popular third priority, supported by 19 per cent of those responding.
By comparison, support for specific committed transport projects such as the Aberdeen Western Peripheral Route and the new Forth crossing was low. Only 1 per cent of people thought the latter was a major investment priority.
Even in those regions likely to benefit most directly from the project – Fife, Lothian and the Borders – the proportion of respondents identifying the new bridge as their top priority was no higher than 4 per cent.
According to Michael Levack, chief executive of the Scottish Building Federation, “This new opinion poll demonstrates those categories of investment that are most important to the Scottish public, and affordable housing is clearly top of the priority list. With the Scottish budget under some significant pressure, there can be no doubt that the Scottish government faces some extremely tough decisions about where to spend the money it has.
“If Scottish ministers were to allow funding allocations for housing, schools and hospitals to suffer because of a determination to press ahead with particular infrastructure projects funded purely through the public purse, this poll shows they would be seriously out of step with what the public wants to see their money spent on.”
Ken Morrison, chair of the Chartered Institute of Building Scotland, added that he hoped these results would “convince those holding the purse strings that increased investment in affordable housing is supported not only by people working in the industry. Alongside investment in building schools and hospitals, it is a key priority for a significant cross-section of the general public as well.
“The general public clearly wants the Scottish government to be more ambitious with the level of public investment it commits to building new homes,” he said. “That should also help to ensure that we build new housing to the high quality standards that people rightfully expect.”