Average house prices in Scotland have exceeded £226,600 for the first time, meaning that Scotland’s housing market hit a new peak for the fifth time this year.

This is according to the latest Walker Fraser Steele House Price index for September, which also reveals that sales activity in August was the strongest for two years.

But as the report highlights, the Scottish housing market continues to experience a low-key recovery, reflecting the overhanging  effects of earlier cost-of-living pressures and higher mortgages rates on household budgets.

Prices in September picked up by a modest £400 (0.2%) compared with August.

Although this is a limited recovery to date, with prices up by only 2-3% on a year-on-year basis in recent months, it follows the mildest of downturns and this has meant that only small price increases have generated this run of fresh market highs.

Market conditions across Scotland were relatively subdued in September, with local price movements finely balanced. Fourteen local authority areas recorded rising prices in the month whilst eighteen saw price falls – one of the weaker performances this year.

Prices in four local authorities hit new market highs, including two of the most expensive areas – East Lothian and East Renfrewshire. Highland and Renfrewshire also came within touching distance of prices which would represent new record highs.

Sales activity has outpaced that of a year earlier in six of the nine months so far this year and for the year to date cumulative sales are tracking 3-4% above the same period of 2023 – more activity reflects higher demand and that typically translates into higher prices.

Meanwhile, and as has been the case for some while, sales in the capital and sales of properties worth more than £750,000 (that is, subject to the highest rates of LBTT) continue to be comfortably ahead of their corresponding 2023 numbers.

However, newbuild completions while picking up slightly in the second quarter are still well down on recent years and this underpins continuing concerns about housing supply in Scotland.  A Housing Investment Task force was put in place by the Government in April 2024 to report by March 2025.

Commenting on the latest data Walker Fraser Steele regional development director Scott Jack said: “Notwithstanding the improving backdrop of the cost of living, the Scottish market appears subdued in September, with fourteen local authority areas reporting rising prices in the month whilst eighteen saw price falls.

“This is a limited and bumpy recovery to date, with prices up by only 2-3% on a year-on-year basis in recent months. The data does not yet reflect any impacts on buyer and seller confidence from the budget, which will become evident over the coming months and it will be interesting to see if mortgage pricing continues to harden as swap rates have risen.”

He added: “The Bank of England Base Rate cut was helpful for affordability and will doubtless ease some home owners’ payments but it is unlikely to provide a significant boost to home buyers.”