Scottish house prices to grow by 3% on average in 2025 - latest Rettie research
“We are now seeing falling interest rates in 2025, and these should feed through to the housing market during the course of the year”
The average Scottish house price is expected to grow by around 3 per cent this year, below the long-term trend, property experts are forecasting.
Publishing its latest projections, Rettie, the Edinburgh-headquartered property firm, pointed to signs of “stability” in Scotland’s housing market. The firm, which is largely focused on the mid to upper end of the market, is also forecasting house sale transactions increasing by about 2 per cent this year.
John Boyle, director of research and strategy at Rettie, said: “The Scottish housing market sailed along at a pretty slow and steady pace in 2024. There was minimal change in the key market metrics, which can be seen as a reasonably good outcome when you consider the headwinds of higher interest rates and a fairly anaemic economy.
“We are now seeing falling interest rates in 2025, and these should feed through to the housing market during the course of the year.
“For 2025, our central forecast is that average house prices will rise by around 3 per cent, and with stronger economic performance from 2026, we expect to be moving back closer to the long-term trend of around 4 per cent in subsequent years. It will take time for the whole market to adjust to higher interest rates as people come off fixed term deals, which will probably lead to average house price growth at modest levels for a time,” he added.
On the sales front, the firm is predicting a “modest improvement” in 2025, but it notes that interest rates will need to fall further to support affordability and encourage greater activity. Most analysts are forecasting at least another couple of quarter-point cuts in borrowing costs during the remainder of this year. New build transactions fell back a further 14 per cent in 2024, Rettie added. Rising costs in the face of a stagnant sales market, along with increasing government regulations, continues to suppress activity, it warned.
Mortgage affordability is said to be improving, although mortgage rates remain at historically high levels. This is driving average mortgage costs below average rental costs, incentivising people to purchase rather than to rent.
Rettie’s spring briefing also notes that a tighter supply is driving the cost of renting higher - the number of new listings in the rental market continues to fall, highlighting the demand/supply imbalance. Rent rises are cooling in the main cities but there have been substantial double-digit rises in the previous two years, creating affordability issues.
Boyle added: “The rental market has cooled after substantial growth in rents, but availability is becoming a more significant problem and there are concerns that this could be exacerbated by forthcoming Scottish Government legislation.”
Last summer saw the average price of a property in Scotland hit a record £200,000, marking a year-on-year increase of more than 5 per cent. In comparison, the UK-wide average house price experienced a more modest year-on-year increase of 2.8 per cent, reaching £293,000. Recently, Motherwell, Glasgow and Paisley emerged as particularly strong housing market locations.
Comments
Want to join the conversation? Please or to comment on this article.