Executive Summary: The Scottish property market in 2025 is defined by stabilising mortgage rates and a severe lack of stock. House prices are forecast to grow modestly (2-4%), with Edinburgh and Glasgow outperforming rural areas due to strong employment sectors.
While the post-pandemic boom has cooled, underlying demand remains robust. The key challenge for 2025 is affordability constraints meeting high buyer interest. This briefing analyses current data and provides a forward look to 2026.
Market Briefing: Key Points
- **Supply Shortage Driving Prices:** Inventory levels remain critically low, preventing significant price corrections despite higher borrowing costs.
- **East vs West Divide:** Edinburgh and the Lothians are seeing stronger price growth than Glasgow, largely due to higher average incomes in the tech and finance sectors.
- **Energy Efficiency is Key:** Properties with high EPC ratings (B or above) are selling faster and commanding premiums as regulations tighten.
- **Rental Market Under Extreme Pressure:** Record-high rental demand is pushing yields up, but Landlord tax changes are constraining new investment.
Current Market Trends (2025)
As of mid-2025, the average house price in Scotland sits approximately between £180,000 and £190,000. Market sentiment indicates a 'two-speed' market. Prime locations in Edinburgh (EH postcode) and the West End of Glasgow (G12) are holding value, with competitive bidding on desirable family homes. Conversely, flats in secondary city centres are seeing longer time-on-market figures. The rental sector remains a landlord's market, with average yields creeping up to 6-7% in key university cities like Aberdeen and Dundee due to the supply crisis.
Buyer & Seller Advice
For Buyers: Be mortgage-ready. With the LBTT (Land and Buildings Transaction Tax) threshold remaining at £140,000, budgeting for tax is essential. Focus on properties with strong energy efficiency to mitigate rising utility costs. In competitive areas, consider 'offers over' pricing strategies carefully; recent data suggests successful closing dates often settle 5-10% above Home Report valuation.
For Sellers: Pricing is critical. Overpricing leads to stagnation in the current market. Ensure your Home Report is fresh and address any repair notes immediately. With fewer buyers chain-free, properties that are 'turn-key' ready are achieving the best prices.
Future Outlook (2026)
Looking ahead to 2026, the Scottish market is expected to align with broader UK economic trends. If the Bank of England base rate stabilises or reduces, we anticipate a surge in transaction volume as pent-up buyer demand releases. However, potential legislative changes regarding short-term lets (Airbnb regulations) in areas like the Highlands and Edinburgh could impact investor behaviour. Overall, steady growth of 3-5% is projected for 2026, driven by continued housing undersupply and strong employment in the green energy sector.
Common Questions
No. While growth has slowed compared to previous years, a crash is unlikely. High employment and a chronic shortage of homes for sale are providing a floor for house prices.
In 2025, the average house price generally ranges between £180,000 and £190,000, though this varies significantly between major cities and rural locations.
Yes, for long-term investors. While mortgage rates are higher than historic lows, competition is slightly less frantic than 2021/22, giving buyers slightly more negotiating power on condition and price.
Edinburgh, East Lothian, and parts of Glasgow (West End and Newton Mearns) are showing the most resilience and growth due to strong local economies and high demand.
LBTT is a progressive tax. No tax is paid on the first £140,000. You pay 2% on the portion between £140,001 and £250,000, and 5% on the portion between £250,001 and £325,000.