Affordability issues raised as house prices continue to increase

House prices in Scotland have been on the rise as supply fails to keep up with continued demand, a new report has found.

The latest Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) revealed that despite a “modest” improvement in new properties coming to the market in Scotland, demand continues to outpace supply and drive up prices.

For the second month in a row new instructions have risen, with 2% more respondents seeing an increase in the flow of properties being put up for sale. A net balance of 43% of chartered surveyors reported an increase of house prices, a trend which has continued since April 2013.

Simon Rubinsohn, RICS chief economist, said the trend raises questions of affordability.

He added: “While we are seeing a rise in house prices in Scotland, unlike many parts of the UK, there is also consistent growth in demand and transaction levels to support this. However, lack of supply across both the sales and rental market continue to put upward pressure on prices, with risks of certain areas becoming unaffordable.”

Sales activity north of the border remained steady, having been in positive territory since January 2018. 37% more respondents to the survey predicted sales to increase over the next three months.

Newly agreed sales across the UK saw the sixteenth successive month of decline.

New buyer enquiries were also strong during June, with a net balance of 33% more chartered surveyors reporting an increase in demand for new homes across Scotland. The number people looking to buy in Scotland has been steady for the last quarter, as the national picture remained flat, prolonging the UK trend which dates back to late 2016.

Looking at the longer-term sales market, transactions levels and price growth are both expected to continue the upward trend during the next twelve months.