Growth in Scotland’s housing market has slowed, with residential property sales, house price inflation and new listings all weakening amid higher mortgage rates.

The latest Scottish Housing Market Review published by the Scottish Government shows residential property sales rose 4.5% to 104,339 in 2025-26, up from 99,832 the previous year. However, the pace of growth eased through the second half of the period, falling from 6.1% in the third quarter of 2025 to 3.3% in the first quarter of 2026.

More recent figures suggest the slowdown has continued. Residential Land and Buildings Transaction Tax (LBTT) returns fell by 2.1% year-on-year in April and by 3.9% in May, while new property listings in Edinburgh were down 8.9% in the second quarter.

House price growth also weakened during 2025-26. According to the UK House Price Index, average prices increased by 3.3% over the year, but annual growth slowed from 3.9% in the final quarter of 2025 to 2% in the first quarter of 2026 – the weakest rate since the second quarter of 2024 and below the long-run average of 2.7%.

Residential LBTT receipts, excluding the Additional Dwelling Supplement, increased by 13.7% to a provisional £744.8m in 2025-26.

The review also found that rents for newly let properties fell by 0.4% in the first quarter of 2026 – the first decline since the end of 2017. Adjusted for inflation, rents were down 3.4%, marking the third consecutive quarter of real-terms falls.

The number of mortgages advanced to first-time buyers increased by 6% during 2025-26, while lending to home movers rose by 4.4%.

Average advertised two-year fixed mortgage rates rose from 4% to 4.9% between January and May for borrowers with a 75% loan-to-value mortgage, while equivalent 90% loan-to-value products increased from 4.3% to 5.3%.

New housebuilding also continued to decline. There were 17,268 new-build completions in the year to March 2026, down 10% on the previous year, while new-build starts fell by 4.4% to 14,955.

Affordable housing completions through the Affordable Housing Supply Programme also declined by 8% over the year to 6,832, while starts increased by 37% and approvals rose by 42%.