The affordability gap between house prices and earnings in Scotland has begun to narrow, according to data from the Bank of Scotland. A typical Scottish home now costs 5.3 times average earnings, a slight decrease from 5.4 times a year ago.
This narrowing is attributed to average property prices increasing by 3.9% over the past year to £223,277, while earnings saw a 5% rise. Despite this, rising mortgage costs continue to impact buyers.
Higher interest rates have led to an increase in average monthly mortgage repayments in Scotland, which have gone up by 9% over the last year, from £793 to £863. Saving for a deposit also remains a significant hurdle, with a typical first-time buyer needing almost £17,000 for a 10% deposit, although this is lower than the UK average of around £24,000.
Isla Benzie, head of mortgages at Bank of Scotland, noted that while house prices and earnings have moved broadly in step, the full picture includes increased borrowing costs and the challenge of saving for a deposit. She also highlighted that location plays a major role in affordability, with areas like Inverclyde, Aberdeen, and Dundee offering more affordable homes compared to parts of Edinburgh.
This information comes as housebuilding in Scotland has reportedly fallen to its lowest level in a decade, with fewer social and new-build homes being delivered. The number of homes completed is at its lowest since 2015, and new starts are at their lowest since 2013, according to data from the Scottish government.