Average Scottish house price could exceed £250k by 2020
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The average house price in Scotland could exceed a quarter of a million pounds by the end of the decade, economists have predicted.
While house price growth has slowed across the UK over the past 12 months, the latest UK Economic Outlook from PricewaterhouseCoopers (PwC) predicts that prices in Scotland will still rise by 4.9 per cent this year – 0.4 per cent below the UK average but ahead of other regions across the North of England and West Midlands.
According to PwC’s UK and regional housing analysis, the average property in Scotland could be worth £200,000 this year, up from £191,000 in 2014.
But the biggest jump is forecast by 2020, with average house prices in Scotland set to reach £259,000 – a 30 per cent increase. This compares well to other parts of the UK with only Northern Ireland (36 per cent), East Midland’s (31 per cent) and the South of England (31 per cent) expected to perform better.
As well as a shift in house prices, the report also reveals changes to tenure trends.
It predicts an ongoing rise in ‘Generation Rent’, the 20-39 year old age group where renting privately is now the norm. A total of 5.4 million UK households currently rent, 130 per cent more than in 2001, with 7.2 million expected to rent by 2025.
A second trend will see a decline in the number of houses with mortgages. The fall from around 10 million to 8 million is expected to continue as large deposits (up almost five-fold since the late 1990s), affordability and mortgage availability make it harder for first time buyers to get on the housing ladder.
Finally PwC said a large and growing segment of the market will own their own homes outright, albeit this will predominantly be amongst older age groups.
Paul Brewer, government and public sector partner at PwC in Scotland, said: “With house buyers facing a triple whammy of affordability, stringent credit conditions and a sharp rise in lender deposit requirements, it’s perhaps not surprising that Generation Rent is here for the medium term at least.
“First time buyers are particularly hard hit, with many now having to turn to private landlords as demand outstrips supply in the housing market.
“Affordable, quality housing is a necessity if we are to achieve our economic ambitions for Scotland. With the ‘right to buy’ scheme set to end on 31 July 2016, it will be interesting to see how the Scottish Government’s strategy and action plan addresses these issues and crucially, plugs the gaps at this end of the housing market.
“Collaboration among developers, social housing providers and government alongside radical and innovative investment measures will be key to solving Scotland – and the UK’s – housing market challenge.”
Regional nominal house price projections in baseline scenario (£000s)
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