Scottish first-time buyer review 2021


22 January 2022

  • Clackmannanshire is the UK’s most affordable area for first-time buyers
  • 9 of the UK’s 10 most affordable locations are in Scotland
  • Average Scottish FTB paid £166,919 for their home in 2021


Clackmannanshire is both Scotland and the UK’s most affordable area for first-time buyers (FTBs), according to new analysis from Bank of Scotland. The review also identified that the average Scottish FTB in 2021 was 31 years old, paid £166,919, and put down a deposit of £37,038 (22%).
 

First-time buyer numbers up

Since 2009 the number of people getting on the housing ladder in Scotland has more than doubled. Having fallen in 2020, the number of people buying a first home jumped by almost a quarter in 2021 – rising 24% to 35,627.

Table 1: Number of First-Time buyers in Scotland.

  Number of first-time buyers Annual % change First-time buyers as % of all home purchase loans
2009  17,580   38%
2010 17,170 -2% 37%
2011 16,220 -6% 38%
2012 18,610 15% 41%
2013 22,920 23% 44%
2014 27,550 20% 47%
2015 28,430 3% 46%
2016 30,660 8% 50%
2017 33,560 9% 50%
2018 32,480 -3% 50%
2019 32,630 0% 49%
2020 28,740 -12% 51%
2021 35,627 24% 49%

Price growth outstrips deposit growth

The average first home in Scotland now costs £166,919, up 8% on 12 months ago, while the average deposit grew by 4% to £37,038. The UK average FTB home was £264,140 - up 3%.

Table 2: First-time buyers: Average price and deposit by UK region, 1 year change 2021

  Average House Price 2020 (£s)  Average House Price 2021 (£s) 

Average Deposit 2020 (£s) 

Average Deposit 2021 (£s)  Deposit as % of purchaseprice 2021  1 Year % change in Deposit 
1 Yr % change in Average Price 
Scotland 154,821 166,919 35,607 37,038 22% 4% 8%
North East 145,254 151,814 28,643 26,769 18% -7% 5%
North West 175,389 189,588 34,185 33,983 18% -1% 8%
Yorkshire and The Humber 167,267 177,683 33,032 31,212 18% -6% 6%
East Midlands 199,503 210,203 39,077 37,171 18% -5% 5%
West Midlands 204,948 209,270 41,928 37,159 18% -11% 2%
East of England 297,548 303,166 58,531 55,250 18% -6% 2%
London 488,771 475,819  130,281 115,759 24% -11% -3%
South East 322,386 320,591 66,706 60,953 19% -9% -1%
South West 239,434 252,263 51,178 49,592 20% -3% 5%
Northern Ireland 147,394 156,594 29,546 29,199 19% -1% 6%
Wales 165,272 180,392 32,368 33,622 19% 4% 9%
UK 256,057 264,140 57,278 53,935 20% -6% 3%

Source: Bank of Scotland, 12 months December 2021

The research also looked at the age of buyers entering the market. In 2011 the average age was 29 for both Scotland and the UK. Since then, FTBs have got older and the average has diverged slightly, with it now standing at 31 in Scotland, compared to 32 for the UK.
 

Affordability better than most

Compared to the rest of the UK, affordability for first-time buyers in Scotland is relatively good. Nine of the ten most affordable areas to buy a first home are in Scotland, with only Allerdale in North West England preventing a clean sweep of Scottish local authorities (LAs). In Scotland’s least affordable location, the City of Edinburgh, homes are more than twice as affordable as the UK’s least affordable, Brent in London, where the average FTB home costs 12.3 times the average income, and below the UK average of 6.3x.

However, based on a benchmark of no more than 4x income for a house price to be considered ‘affordable’, 17 of 29 local authorities in Scotland are now ‘unaffordable’, up from just seven in 2011. (See Table 3)

The growth of house prices has outstripped the growth of wages in all but three local authorities in Scotland over the last 10 years (also the only three in the UK): Moray and Clackmannanshire saw marginal improvements in their price to earnings ratio (P/E ratio), while in East Ayrshire there was no change. In all other Scottish local authorities, first-time buyer affordability fell, with Argyll and Bute seeing the biggest deterioration. 

Table 3. FTB affordability in Scotland

Local Authority Area Average price 12 months to Dec 2021  Ave earnings 2021 est  P/E  atio 2021 P/E ratio 2011
City of Edinburgh £232,386 £42,244 5.5 4.1
East Lothian £202,447 £36,865 5.5 4.1
Argyll and Bute £153,833 £29,904 5.1 3.3
Aberdeen City £176,920 £35,655 5.0 4.0
Midlothian £179,725 £36,375 4.9 3.9
Highland £167,990 £34,629 4.9 4.5
Aberdeenshire £184,130 £38,387 4.8 4.2
Perth and Kinross £165,766 £34,970 4.7 4.2
Scottish Borders £155,173 £32,749 4.7 3.9
East Dunbartonshire £213,480 £46,197 4.6 3.7
Glasgow City £168,923 £36,602 4.6 3.5
Angus £156,365 £33,926 4.6 4.2
Dundee City £144,685 £31,477 4.6 3.7
West Lothian £162,511 £36,431 4.5 3.3
Dumfries and Galloway £136,341 £32,119 4.2 3.7
East Renfrewshire £221,314 £54,034 4.1 3.6
Falkirk £139,022 £34,266 4.1 3.2
Fife £142,763 £35,896 4.0 3.1
Moray £147,326 £37,308 3.9 4.0
Stirling £179,658 £45,521 3.9 2.8
South Ayrshire £137,748 £36,130 3.8 2.9
South Lanarkshire £143,374 £37,793 3.8 3.2
Inverclyde £121,975 £33,862 3.6 3.0
North Lanarkshire £126,034 £35,098 3.6 3.2
Renfrewshire £133,379 £38,006 3.5 2.9
North Ayrshire £119,064 £36,116 3.3 3.0
East Ayrshire £113,551 £35,556 3.2 3.2
West Dunbartonshire £114,697 £36,107 3.2 3.1
Clackmannanshire £108,317 £35,725 3.0 3.2


Graham Blair, Mortgages Director, Bank of Scotland, said: “2021 was a busy year for housing transactions in Scotland, and despite prices growing faster than wages, that surge of sales was seen not just in those moving home but also those getting their foot on the housing ladder.

“While working from home and the ‘race for space’ was key for many, particularly movers, it’s clear that the Stamp Duty holiday increased the availability of first-rung homes as others moved up the ladder.

“Affordability for first-time buyers may be comparatively good in Scotland but it is falling, and fewer places than ever are seen as being within the reach of those getting on the housing ladder.”