Scottish Building Society warns of ‘lost generation’ of young buyers as house prices surge

Paul Denton, the head of Scottish Building Society (SBS), has welcomed a dramatic rise in house prices - but warned the impact of COVID-19 could prove a barrier to a generation of buyers getting on to the housing ladder.

Paul Denton

Yesterday’s House Price Index released by the Land Registry and the Office for National Statistics (ONS) reports that year-on-year property prices in Scotland surged 8.6% in November to £165,703 - ahead of the UK average of 7.6%.

But Mr Denton said young buyers could be worst hit as house price rises continue to outstrip income.

He said: “The increase is driven by pent-up demand caused by lockdown earlier last year. It does also highlight systemic changes in the market which could have consequences on the ability of a generation of young people to buy their own homes.

“Remote working, lockdown and the end to the daily commute has seen people re-evaluate their priorities on the type and size of house they and their family need. People are looking for larger homes outside the city, with gardens and home offices.

“However, before COVID-19, Scotland was suffering a significant lack of housing stock – with 80,000 fewer homes built each year since the last financial crash.

“Now the unpredictable consequences of Covid-19 could exacerbate that shortage and increase the generational inequality gap. House prices have soared disproportionally relative to income, and many young people struggle to save up for deposits which can be close to their annual salary. They end up relying on the bank of mum or dad or stay at home longer.”

Average house prices rose 152% in the 20 years to 2016, while family income for 25 to 34-year-olds only grew by 22%.

Mr Denton added: “There is no magic bullet to solving this problem, but it does need to be recognised as an urgent priority for our industry and governments.

“The housing market is worth £18 billion and key to the recovery from a pandemic that has left permanent economic and societal scars. Part of that recovery has to be a real strategic collaboration to ensure that we do not leave a generation of young people behind.”

In Scotland, terraced properties showed the largest increase, rising by 10.0% to £139,874. The largest increase was in East Ayrshire at 15.6% to £110,073. The only decrease was recorded in Aberdeen City, where the average price fell by 3.4% to £140,629.

Related posts