Scotland misses out on mini house price boom

Research from the Nationwide shows a much smaller price rise for houses in Scotland.

The building society’s research shows that average prices for all the home nations and regions are higher than a year ago and most regions saw a slight increase in annual price growth between July and September.

Nationwide Chief Economist Robert Gardner said: “The South West was the strongest performing region, with annual price growth rising from 2.3% to 5.5%.

But he added: “Scotland was one of the few areas to see a slowing in the annual rate of price growth, to 2% in quarter three, compared to 4.0% in quarter two.

Looking across the market, he said: “UK house prices increased by 0.9% month-on-month in September, after taking account of seasonal effects, following a 2.0% rise in August.

“As a result, there was a further pick up in annual house price growth from 3.7% in August to 5.0% in September – the highest level since September 2016.

“Housing market activity has recovered strongly in recent months. Mortgage approvals for house purchase rose from (around) 66,000 in July to almost 85,000 in August – the highest since 2007, well above the monthly average of 66,000 prevailing in 2019.”

Gardner added that the rebound reflected several factors: “Pent-up demand is coming through, with decisions taken to move before lockdown now progressing.

“The stamp duty holiday (8 July 2020 until 31 March 2021) is adding to momentum by bringing purchases forward. Behavioural shifts may also be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown.”

But he went on to highlight that the Nationwide research also showed some people putting off moving home, particularly the young, which could reflect concerns about employment prospects.

He continued: “Indeed, most forecasters expect labour market conditions to weaken significantly in the quarters ahead as tighter restrictions dampen economic activity and the furlough scheme winds down.

“While the recently announced jobs support scheme will provide some assistance, it is not as comprehensive as the furlough scheme it replaces.”

Returning to the home nation and regional perspective, Gardner added: “For the first time since 2017, house price growth in southern England (London, Outer Metropolitan, Outer South East, East Anglia and South West) exceeded that in northern England (North, North West, Yorkshire and Humberside, East Midlands and West Midlands).”

Annual house price growth across the areas defined by Nationwide as southern England stood at 4.7% in the third quarter of 2020, up from 1.9% in the second quarter, while Wales’ annual growth accelerated to 3.8%, from 1.0% in quarter two, with northern England standing at 3.7%, up from 2.1% in the second quarter, which left Scotland as the back marker.