There were plenty of headlines last week reporting that average house prices in Scotland have pretty much returned to their pre-crisis peak. Here’s an example from the Scotsman.
Sounds good, doesn’t it? But it reminds me of the old warning about a 6ft tall man drowning while trying to cross a river that was, on average, 5ft deep. By their nature, averages even out the ‘lumps’ and, for home owners (as opposed to economists), it’s the lumps that are important.
In some areas, your house could well be worth a good deal more today than it was at the top of the market in 2007. In others, average prices are still well below where they were seven years ago. The graphs below show just two examples.
To give a better insight in to what has happened in the years since 2007, we’ve created a new section on ‘Area Reports’ showing changes in average selling price and volume of sales in each of the 12 local authority areas in which GSPC operates. The data is taken from the Registers of Scotland. You can find those reports here.
Now, it’s true that most areas saw prices rise last year. GSPC published an estimate in early January which put the increase at 4.5% (see here). Registers of Scotland issued a report in February that put the increase at 3.4% (see here).
Out of the 12 local authorities in our area, seven saw selling prices rise in 2014, three saw prices broadly unchanged and two saw a further fall in prices.
But look back over the last seven years and only five areas have average selling prices above their 2007 peak. They are East Dunbartonshire, East Renfrewshire, North Ayrshire (just), Renfrewshire and West Dunbartonshire.
Average prices in the other seven areas are still lower today than they were at the top of the market – including Glasgow. Indeed, the chances are that within Glasgow there are areas where prices have recovered fully and others where that is not the case – we just don’t have the data to prove it.
So, while it might be true that average prices across Scotland have recovered most of their lost ground, that’s not necessarily going to be the case for everyone. What you read in the papers may be true, but it’s not the whole story.