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Big changes in the Scottish housing market
New research by Bank of Scotland has looked at the key developments in the Scottish housing market since the Queen’s coronation and has revealed how vastly times have changed.
Nitesh Patel, housing economist at Bank of Scotland, explains: "The Scottish housing market has undergone some extraordinary changes since the Queen’s coronation, reflecting the changing way we live our lives. Today, the typical household in Scotland is very different following the substantial shift towards owner-occupation with the majority of households now living in their own homes rather than renting."
House prices across Scotland have risen by an average of 91 per cent in real terms1 over the past 40 years. Prices have increased at an average annual rate of 1.6 per cent.
House prices in the 2000s recorded their biggest increase with a real rise of 36 per cent between 2001 and 2011; greater than the increase of 29 per cent in the 1980s. The worst performing decade was the 1990s when house prices declined by 12 per cent in real terms.
Scotland has seen the smallest increase in house prices in the UK over the past 40 years and London has seen the biggest growth in house prices across the UK with a real rise of 189 per cent, at an average annual rate of 2.7 per cent.
The South West of England recorded the second biggest increase (163 per cent), followed by Yorkshire and the Humber (159 per cent).
House prices have been the highest in relation to people's earnings over the last ten years. House prices in Scotland averaged 3.7 as a multiple of gross annual average earnings between 2001 and 2011, peaking at the highest level in the past 40 years in 2007 at 4.7. This compared with a ratio of 3.3 in 1971. Property values were lowest in relation to earnings in the 1990s when the average house price to earnings ratio was 3.1.
Whilst more than 1.6 million homes have been built in Scotland in the past 60 years, the number of houses built each year has fallen by nearly a quarter (24 per cent) since 1951, from 22,930 to an estimated 17,500 in 2011. This drop has been driven by a dramatic fall in the volume of public sector housing being built.