CBRE is predicting a ‘relatively soft landing’ for house prices in Scotland this year with a fall of just 0.8% in 2024 – slightly less than the UK average forecast of 0.9%.
The global real estate advisor said it expects average prices to rebound in 2025 and rise by 4.2% to £187,589, followed by a further 5% uptick in 2026 to £196,968.
Looking at the bigger picture, prices are expected to rise by 16.4% in Scotland between 2024 and 2028.
Chris Dougray, executive director for development at CBRE Scotland, said, “The Scottish property market continues to be resilient despite the current financial climate. Mortgage stress testing, an improved economic backdrop and base rate peaking at a lower level than anticipated means that the market has been shielded from larger falls than originally forecast this year. Affordability is less of a factor in Scotland than in other parts of the UK but there is still a shortfall in the number of new homes being built here.”
CBRE has upgraded its 2024 UK house price forecast, from a fall of 2.2% to a 0.9% decline. This will follow a 2.1% annual fall CBRE anticipates for full-year 2023.
The business forecasts the base rate to fall to around 4.8% by Q4 2024 as inflation gets closer to the Bank of England’s 2% target.
CBRE added that home sales volumes are not expected to rebound significantly, but an improved macro-economic backdrop and falling interest rates will underpin demand in 2024.
Rental growth is forecast to remain strong but decelerate from the 6.2% forecast level in 2023, to 5.1% in 2024, due to falling inflation and stretched affordability.
Dougray added, “Renters are facing a lack of supply, made worse by private landlords leaving the market because of interest rate hikes and previous tax changes. The same interest rate rises have also pushed homeownership further out of reach for many, compounding the already high-level of demand for rental homes.”