Property agency Rettie is forecasting a 3% rise in average Scottish house prices this year, citing a more stable economic outlook and the potential for falling interest rates to support modest market growth.
The firm’s latest Spring market briefing also predicts a 2% increase in housing transactions in 2025, building on a 5% rise recorded last year—a marked change from the cumulative double-digit sales declines seen in the two years prior.
Dr John Boyle, director of research and strategy at Rettie, said: “The Scottish housing market sailed along at a pretty slow and steady pace in 2024. There was minimal change in the key market metrics, which can be seen as a reasonably good outcome when you consider the headwinds of higher interest rates and a fairly anaemic economy. We are now seeing falling interest rates in 2025, and these should feed through to the housing market during the course of the year.”
He added: “For 2025, our central forecast is that average house prices will rise by around 3 per cent, and with stronger economic performance from 2026, we expect to be moving back closer to the long-term trend of around 4 per cent in subsequent years. It will take time for the whole market to adjust to higher interest rates as people come off fixed term deals, which will probably lead to average house price growth at modest levels for a time.”
In the lettings market, Rettie reported that rent rises have begun to cool in Scotland’s main cities following two years of double-digit increases. However, limited supply remains a concern, with a drop in new rental listings exacerbating affordability pressures.
“The rental market has cooled after substantial growth in rents, but availability is becoming a more significant problem and there are concerns that this could be exacerbated by forthcoming Scottish Government legislation,” said Boyle.
The firm said that mortgage affordability is improving, although borrowing costs remain high by historic standards. Rettie notes that mortgage payments have now fallen below rental costs on average, which could drive more prospective buyers into the sales market.
New build transactions were down 14% in 2024, with developers continuing to face rising costs and increasing regulation. Rettie said this was contributing to the wider shortage of supply across both the rental and ownership market
