Not The New Normal
As we emerge from lockdown restrictions and start to enjoy sharing a meal indoors with friends, visiting family members and perhaps dreaming of a foreign holiday, or at least a staycation somewhere in Scotland, the housing market remains the primary preoccupation for many households. From the market closure to sales boom, the housing market appears to many to have been in a fever since last summer, however, there is more than just delirium behind the rising prices and strong demand.For many people, the compromises they have been making on locations and living space, for reasons of convenience and commutability, may now be increasingly unnecessary. Combine this with the fact the closure of the market built up demand, meaning that when transacting was allowed again there was a flood of activity. These factors have created a supply and demand imbalance, with more demand for desirable house types and locations than there is supply in the market.
As 2021 has progressed, these conditions have created a highly competitive rising market, but despite all the fluctuations over the past 12 months, there has been a broadly similar value of property transacted when compared to the 12 months preceding the lockdown.
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Looking ahead, we expect 2021 to record strong price growth of around +8% before the market rebalances and cools in 2022.

Key Findings

+8.5% average house price
2021 has seen exceptional price growth, resulting in the average house price in Scotland in the past 12 months to Q1 2021 rising +8.5% year-on-year

+40% applicants
Supply in the market lags demand, with new applicants to Rettie & Co +40% up on pre-pandemic levels. New supply is only recently catching up with pre-pandemic levels

Strong recovery
Mortgage lending has pointed to a strong recovery among home movers and first-time buyers from market lows in Q2 2020
A Year Like No Other
In the 28 years since Rettie & Co. was founded, we have experienced multiple recessions, economic bubbles, a global financial crisis, Brexit, an independence referendum, and now we can add a pandemic. Without hyperbole, the past year has been a year like no other. For the market, this created the sharpest contraction then rebound in activity, generating some of the strongest demand in the past 30 years. This has been especially noticeable in many of the prime and popular markets in which Rettie & Co. operate. Whether it has been Edinburgh’s New Town, the prime commuter belt of Glasgow, or our newly opened branch in St Andrews, the level of enquiries and applicants’ registrations have only been paralleled by the exceptional conditions before the global financial crisis, which was fuelled by a very different cocktail of excessive lending and speculation. Such factors are not prevalent this time, rather the rise in activity has been generated by equity and lifestyle aspiration.
So far this year, we have continued to see enquiry and demand well above pre-pandemic levels, while supply in many of the core markets lags. This is having the effect of increasing competition and, in turn, prices. Buyers with money saved over lockdown, look to either relocate from urban centres to rural idylls, or look to Scotland from down south to improve lifestyle. Rettie & Co. worked quickly at the start of lockdown to introduce virtual meetings and virtual viewings, and these tools continue to provide buyers with access to the required information prior to deciding to view a property. Such measures have allowed us to maintain a high quality of service, maximising results for our clients, despite the often unusual conditions.
Looking ahead, we expect current conditions to persist through the Summer months, before potentially cooling as the market rebalances, the economy returns to normal and thoughts return to foreign holidays and family gatherings.
We hope you all stay safe in the meantime and find this market analysis useful and interesting.

