Have we reached the tipping point for Scottish housing market?

The latest official data shows that growth in the number of new loan approvals in Scotland has slumped in comparison to the rest of the UK. The figures revealed that while the number of loans for house purchases has risen by 17% across the whole of the UK in 2025 in Scotland it has only risen by 8% which was the lowest increase for any country or region in the UK.

Around 66,000 home purchase loans were provided in Scotland over the last year which was an increase from 61,000 the previous year comprising 34,200 first-time buyers and 31,900 home-movers.
This slowdown in loan approvals is particularly concerning given that Scotland has some of the most affordable local authorities in the UK. For example, East Ayrshire and Inverclyde have among the most affordable homes in the UK with borrowers spending around 17% of their income on mortgage costs.

Any divergence of activity between Scotland and the rest of the UK is of concern. If these issues aren’t addressed and become a long-term trend, then Scotland risks falling behind our neighbours south of the border.

A recent Royal Institute for Chartered Surveyors survey suggested that Scotland’s slowdown could be driven by a lack of confidence, not cost, and they suggest this could be linked to the housing emergency two years ago, rising homelessness, and a lack of affordable homes for sale creating a bottleneck holding back purchases.
The loss of confidence could also be down to events in the world, higher living costs, and mortgage and employment uncertainty. However, these same circumstances exist across the UK so there must be further reasons for the lower activity in Scotland.

There is evidence that one part of the housing sector is holding back from property purchases. Recent data shows that last year investment in the private rented sector (PRS) soared by 29% in Wales but was more muted in Scotland increasing by just 6% which was among the lowest levels in the UK. The stronger regulatory environment for landlords and property investors in Scotland alongside proposed future rent controls in the Housing Act are possible reasons for the reduced investment in the sector. Yet this is despite Scotland providing some of the strongest rental returns in the UK. 

Aside from the general issues relating to the economy part of the reasons for these numbers must be the substantially higher costs of property transactions due to the Land and Building Transaction Tax being levied at a much higher level from a lower starting price. Equally the low volumes of house production cannot be helping, alongside the higher levels of personal taxation, nor the relative ineffectiveness in resolving the current housing emergency.

These figures may be a tipping point where Scotland’s higher personal and property taxes are impacting on the housing market and limiting its activity. It is essential, therefore, for a timely response to this data. Scotland cannot afford to fall behind in housing purchase activity. Action is required now and these figures are a further example of where our housing market is diverging from the rest of the UK.