House Prices in Scotland
This report focuses on the time period between 2020 and 2022, the number of house sales during this time and the types of houses that were purchased. The Rural and Environment Science and Analytical Services division of the Scottish Government (RESAS) classified four local authority areas - Argyll and Bute, the Shetland Islands, the Orkney Islands and Eilean Siar - as ‘islands and remote rural’ in its 2018 research paper ‘Understanding the Scottish rural economy’.
Focusing initially on these ‘islands and remote rural’ authorities, the data shows us that there was a 30.1% increase in the average house price from 2020 to 2022 (from £143,813 to £205,737) in the Orkney Islands. This was the largest percentage increase of any of Scotland’s local authorities. This increase seems to have been particularly driven by the prices of detached and new build houses, although sales fell from 2021 to 2022, likely as a result of the Covid-19 pandemic.
Increases in average house prices from 2020 to 2022 were also observed in the other three ‘islands and remote rural’ local authorities, with a 23.1% increase in Argyll and Bute, 21.5% in Eilean Siar and 19.1% in the Shetland Islands (an average increase of 23.5% across the four areas). As in Orkney, across all of these council areas, total house sales fell from 2021 to 2022 but the rise in prices seems to have been driven by new build housing in particular.
There was considerable variation in the percentage increase in house prices across the 11 RESAS classified ‘mainly rural’ local authorities during the same time period. Aberdeenshire saw the lowest percentage increase of the 11 authorities from 2020 to 2022 (11.7%), while East Lothian saw the highest percentage increase of 20.9%. East Ayrshire, Clackmannanshire and the Scottish Borders all saw increases of approximately 19%.
Other research has shown that high demand for second and holiday homes as well as a low supply of rental housing for private and housing association properties place additional pressure on rural housing markets. This demand, combined with a dominance of low wages across many key employing sectors, means that even cheaper priced housing (for rent or purchase) is out of the reach of many local people. This has a knock-on impact, for example in terms of hidden homelessness amongst young people who may be forced to stay with their parents for longer than they would like. We will be undertaking further work to explore migration patterns at local authority level, including during the Covid-19 pandemic, to assess the extent to which the high house price rises in Orkney, Argyll and Bute and East Lothian for example, may be driven by people moving out of the larger cities in search of more space.
