Scotland homes: Cost of living crisis impacts housing market

In day one, business correspondent Kristy Dorsey revealed that higher mortgage rates are adding to long-standing affordability issues in the housing market.

First-time buyers are increasingly turning to "the bank of mum and dad" to secure a mortgage as a generation that has until recently only ever known rock-bottom interest rates attempts to secure a footing on the property ladder.

While surging house prices have for many years been a barrier to first-time buyers, 14 consecutive interest rate increases by the Bank of England has on top of that heaped hundreds of extra pounds onto the monthly cost of financing a mortgage (Image: Newsquest)

ANALYSIS

Finance experts weigh in on how best to afford a mortgage

While house prices in some areas have started to ease, they have so far remained quite steady and quite high across many regions.

Latest official figures from the Office for National Statistics (ONS) show the average UK price in June was up 1.7% on the same period a year earlier at £288,000, £5,000 higher than 12 months ago but £5,000 less than November 2022's peak. In Scotland the average price stood at £189,000, though this is much higher in sought-after areas such as East Renfrewshire, Edinburgh and East Lothian.

Scots rental market in turmoil as housing shortfall widens

The future of Scotland’s rented housing market is at the centre of intense debate, with tenants’ groups and property firms at odds over how to solve a housing crisis that some are branding an emergency, deputy business editor Scott Wright revealed on day two of the series.

Property insiders say existing rent controls, which currently cap rent rises at 3% following a temporary freeze to help tenants through the cost-of-living crisis, are causing landlords to quit the industry and investors to walk away from build-to-rent projects they say would help tackle the current shortage (Image: PA)

Tenants’ representatives are urging the Scottish Government to further tighten rent controls as a combination of economic factors exert upward pressure on the monthly cost of rent, sparking unprecedented demand for help and advice from organisations such as Citizens Advice Scotland.

ANALYSIS

Major action needed to solve rent crisis

It would seem to be impossible to dispute the assertion that the property rental market in Scotland is in the midst of a crisis.

Rental costs are rising sharply amid a worsening shortfall in the availability of affordable homes, with more people entering the private rental sector as universities enrol more students and people are finding it more difficult to buy homes because of high interest rates.

Rural housing shortage a 'huge barrier' to Scottish industry

The shortage of rural housing has been pinpointed as the “single biggest block” to business growth in one of Scotland’s most popular tourist regions, Scott Wright outlined on day three.

One Highland property developer said the Scottish Government needs to deliver more housing across different types of tenure to “target those in need”, as the gap between the supply and demand of affordable homes steadily widens across the region (Image: PA)

The co-owner of a leading tourism business in Tyndrum told The Herald that an accommodation shortfall is impeding plans for economic development in rural areas.

It came as tourism and hospitality firms across Scotland continue to face acute staff shortages in part because of insufficient housing, leaving many unable to trade at full capacity.

ANALYSIS

Highland firm calls for homes to 'target those in need'

The chief executive of Highland Housing Alliance, an Inverness-based property firm which specialises in remote areas often overlooked by major developers, has offered its suggestions for tackling the shortage of homes across the region.

HHA chief executive Gail Matheson declared that there is a “significant gap” between the supply and demand of affordable homes in the area, which she said has “worsened” in recent years because of an “under-delivery” of homes, rising land prices, and constraints on the amount of land available for development.

OPINION

Ian McConnell: Incredible dream which has transformed fragile island community

Having covered the Isle of Harris Distillery story for more than a decade now, it was particularly interesting to catch up in recent days with those leading the business into “a new era”.

'It was particularly interesting to hear again first-hand about the distillery’s progress after covering the story all the way from the early stages of a very ambitious multi-million-pound fundraising drive to enable the dream of producing Scotch whisky on Harris to become a reality' (Image: Isle of Harris Distillers)

It would, for the avoidance of doubt, have been fascinating to hear from Isle of Harris Distillers chairman and chief financial officer Ron MacEachran and managing director Simon Erlanger in any case. The pair have a compelling story to tell, as they prepare to launch The Hearach single malt Scotch whisky. The distillery at Tarbert on Harris also expects to bottle its millionth bottle of the award-winning Isle of Harris gin next month.

OPINION

Brian Donnelly: Final plea to Humza Yousaf amid ‘division and hate’ over short-term lets

Tourism leaders have called on First Minister Humza Yousaf to postpone new licensing laws amid a wave of "hate and division" around the issue.

The measures are aimed at broaching concerns around Scotland’s housing squeeze and to tackle the impact of the rise of unregulated Airbnb-style short-term lets and anti-social behaviour (Image: Newsquest)

The new push for a “more workable, fair, proportionate and agreeable solution” to short-term let regulation in Scotland came after support emerged from an unlikely quarter. As the deadline for small tourism businesses such as guest houses to register for “onerous” new fees and planning regulation approaches, a “final plea” was made to the First Minister.