The newspapers have been full of articles about house prices in Scotland rising faster than anywhere else in the UK (with the exception of London and the South East). Prices, says the latest Acadata report, have been: ‘propelled forward by a significant number of sales’.
But even a cursory look at the data shows it’s not as simple as that. Data from the Registers of Scotland shows that Inverclyde saw the largest leap in sales (up by 44%), but also the largest decline in prices (down by -8.7%) during the last year. East Ayrshire saw sales 23% higher compared to the same time last year, but prices 4.5% lower.
Conversely, prices in South Ayrshire rose by 7.4%, but sales were only up by a much more modest 17%. The same is broadly true for Argyll & Bute.
In short, there is no causal relationship between the volume of sales and average selling prices. Prices can easily fall while sales are rising if those sales are triggered because sellers are accepting lower offers. That has happened more than once during this recession.
Equally, prices can rise when sales are falling if the fall in sales is down to a decline in the number of homes coming on to the market. Again, prices were regularly supported during the recession by a lack of supply.
So, the line that prices are rising in response to higher sales is simplistic. Nevertheless, the illustration of how prices have performed relative to transactions in the local authorities in west central Scotland only serves to remind us that prices depend on local market conditions. The headline that prices are rising faster in Scotland than elsewhere may be true, but it is a generalisation that does not reflect reality for anyone. What matters is what is happening in your area and that is likely to be very different from the national figure.