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An Overview of the Scottish Property Market in 2024 and Predictions for 2025

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As 2024 comes to an end, we take a closer look at the market’s performance over the last year and give our predictions for 2025. 

The property market followed its usual seasonal pattern in 2024, with a bustling spring and autumn and a slightly quieter summer market. Despite the usual slowdown in the run-up to Christmas, the residential market in Edinburgh and the Lothians remains resilient, supported by serious and motivated buyers who continue to search during the winter months.  

Following a period of rapid price increases in the years after Covid, 2024 marked a shift toward stability. House prices across the region levelled out, with fewer properties achieving the dramatic percentages above valuation as seen in prior years.

Selling times have gradually lengthened across the region.  However, the market’s performance, as well as supply and demand levels, have varied depending on the location and property type.  For example, good quality family homes in the most sought-after areas remain scarce, whilst changes to letting legislation have resulted in a noticeable increase in flats entering the market.  As new build developers navigate challenges such as surplus inventory, subdued demand, and rising material and labour costs, many are offering attractive buyer incentives, making new-build properties an appealing option for many.

Property chains have become increasingly common over the last year.  Many buyers, particularly families, are reluctant to list their current home without securing an onward purchase first. This is often due to the worry of being temporarily homeless or because they are struggling to find a suitable property to buy.  While renting between sales was once a popular option, high rental costs and limited availability have made this less feasible.  We have therefore seen a huge increase in the number of offers being submitted subject to the sale of an existing property.  When these offers are accepted, it can lead to increased timescales, risk and stress for all involved; it only takes one part of the chain to fail for it all to fall through.

Despite these hurdles, Edinburgh and the Lothians continue to outpace other regions in Scotland and the UK when it comes to the speed of sales. While average selling times have risen slightly, the region’s strong appeal keeps activity ticking over compared to national trends.

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Throughout 2024, interest rates had a notable impact on buyer activity.  When interest rates were at a peak of 5.25% in the earlier half of the year, cautious purchasing decisions became more common.  Some homeowners were even compelled to sell their homes due to soaring mortgage payments, generally caused by a fixed rate offer coming to an end. A 0.25% base rate reduction by the Bank of England in August saw a short-lived increase in buyer confidence buoyed by some slightly more attractive mortgage deals.  Whilst we have now seen another 0.25% reduction, taking the base rate to 4.75%, the aftermath of the Autumn Budget disappointingly caused many lenders to increase mortgage rates again.  With inflation now back above the Bank’s target, we don’t expect to see any further reductions in the near future. 

The government confirmed in the Autumn Budget that VAT would be added to private school fees from the start of 2025.  We believe that this could have a notable impact in Edinburgh & The Lothians where a significant proportion of the population are privately educated (21% at secondary school level compared to the UK average of 5.9%). In areas with a strong state school catchment, demand and prices for housing are likely to increase as families reassess their options amid rising private education costs.  The budget did, however, provide some relief to investors as there were no changes to Capital Gains Tax on residential property gains.  

Towards the end of the year, it was announced that the Additional Dwelling Supplement (ADS) was increasing from 6% to 8% from the 5th December 2024. This was an abrupt, overnight change and created distress and frustration for those whose transaction hadn’t yet concluded, as they were suddenly subjected to the new rate.  In many cases, asking prices were re-negotiated.  Moving into the new year, we predict that this will put a strain on the buy-to-let market, as well as those looking to purchase second homes.  

Moving into the new year, we anticipate that 2025 will provide a steady market, with modest price growth of around 2-3%.  Buyers should expect a strong availability of stock, and we predict many properties will sell closer to their Home Report valuation compared to this year (with the exception of highly sought after areas and property types).  Selling times are likely to remain consistent at around 3–6 weeks, and we hope to see more competition between mortgage lenders.

If you have any questions or concerns about the upcoming property market in 2025, or you thinking about moving to a new home and would like to discuss the next steps, please get in contact with us. You can speak to a member of our team by calling 0131 603 7333 or sending an email to enquiries@coulters.io.

About Sophie Duns

Sophie has been a member of the Coulters team since 2014 and is now Area Director of our East Lothian branch. Having grown up in East Lothian she brings excellent local market knowledge to both residential and new build development sales, advising clients on property value, marketing and sales strategy. Sophie has a passion for providing excellent customer service and ensuring clients are given the best possible advice and care. In her spare time Sophie can be found in the gym or enjoying a walk down on the beach with her family.