We have witnessed an extraordinary period in Scotland’s residential market as the pandemic boosted demand for larger homes with gardens and space to work. Consequently, the number of net agreed sales increased by 36% between July and December last year compared to 2019, according to data provider TwentyCi. The surge in activity has fed official data, with 65,501 transactions recorded between October 2020 and March 2021, the highest figure in 13 years, according to the Registers of Scotland.

With the ability to lock into low costs of borrowing, the increase in sales was amplified in the prime market, as wealthy and financially secure households have had both the inclination and opportunity to respond to a reassessment of their housing preferences and needs. 

As a result, Scotland witnessed a record number of prime transactions above £400,000 during the 12 months to March 2021. Activity in country locations has been exceptional, driven by a desired change in lifestyle. However, city, suburban and commuter areas have also seen a rise in sales, as many buyers have chosen to be closer to family, schools or places of work, as life starts to resemble something of a new normal.

The prolonged nature of social distancing appears to have embedded the changes in buyer priorities with market momentum continuing in 2021. The number of net agreed sales in Scotland during January to April this year was 33% higher than the average between 2017 and 2019. But the level of sales activity has created shortages in the amount of property available to buy. This has resulted in a supply/demand imbalance that will underpin Scottish house prices throughout 2021.

Looking ahead, the vaccination programme and the consequential relaxation of social distancing will increase buyer commitment over the medium term. This is also likely to bring more stock to the market, particularly from downsizers and others who were reluctant to sell while risks from Covid were high. This should gradually ease some of the current supply constraints.

While the majority of sales activity has come from Scottish buyers, demand from London and the rest of the UK has remained strong, despite prospects of another Independence Referendum, as buyers seek more space and value for money. Good quality and appropriately priced properties, particularly in desirable hotspots, will continue to receive competitive bids and interest from buyers outside Scotland and beyond as international travel restrictions begin to be eased.

Forecasts - annual change in residential values