A study by UK Finance, the collective voice of the banking and finance industry, shows that the number of loans for house purchases jumped by 17 per cent across the UK in 2025.
But in Scotland, growth limped to just eight per cent — the weakest of any nation or region in the country. Around 66,000 home purchase loans were recorded north of the border in 2025 — including 34,200 first-time buyers and 31,900 home-movers — up from roughly 61,000 the year before.
Yet seven of the ten most affordable local authorities in the UK are in Scotland, where buyers typically need to spend far less of their income on mortgage payments than elsewhere.
A survey by the Royal Institution of Chartered Surveyors suggests Scotland’s slowdown is being driven by confidence, not cost. While the Scottish Government declared a housing emergency two years ago, rising homelessness and a lack of affordable homes for sale have created a bottleneck that has been seen to hold back purchases.
The RICS survey found fewer homeowners are putting properties up for sale, with new listings also falling, suggesting sellers are just as uncertain as buyers. As one surveyor put it, there is “a general lack of confidence in the sales market from sellers and buyers due to world events, increasing living costs, mortgages and upcoming elections creating uncertainty.”
Even Northern Ireland, often grouped with Scotland as a more affordable market, saw faster growth at 11 per cent, while Wales slightly outpaced the UK average. In England, some regions surged ahead, with lending up more than 20 per cent in places like the East Midlands and East Anglia.
The figures lay bare a widening gap between Scotland and the rest of the UK housing market.
East Ayrshire and Inverclyde offered the most affordable homes in the UK, according to the research, with borrowers forking out around 17 per cent of their income on mortgage costs — compared with more than 25.7% per cent in the least affordable area of England, North Norfolk.
It comes as mortgage costs remain a major pressure on buyers across the UK. The average fixed-rate deal is now sitting at around five to six per cent, meaning borrowing is still far more expensive than it was just a few years ago, when rates were closer to two per cent.
Rates had started to ease slightly at the end of last year, but that improvement has stalled. In recent months, lenders have begun pushing prices back up again, with many deals withdrawn and reissued at higher rates as inflation fears and global tensions have unsettled financial markets.
The Bank of England has kept its main interest rate at 3.75%, and markets now expect borrowing costs to stay higher for longer. That means mortgages are unlikely to fall sharply any time soon.
“This report highlights how significantly the homebuying experience can vary across the UK, reinforcing that there is no single UK mortgage market,” the report states.
It adds: “Housing is not just a financial product; it is a local, lived experience.”
Two years ago the Scottish Government joined 13 councils, including Glasgow in declaring a symbolic housing emergency with First Minister John Swinney saying: “What we want to do is to reach out to other parties and to recognise the significance of the challenge that exists.”
It then took housing secretary Màiri McAllan 16 months to unveil an emergency plan to tackle Scotland’s housing crisis. Announced in September, it included a £4.9 billion pledge to boost affordable housing — but experts warned it still fell £1.7bn short of what is needed to meet demand.
Ministers have been criticised for the slow pace of housebuilding in Scotland at a time when more than 10,000 children in homeless families were stuck living in temporary accommodation across the country, including in bed and breakfasts.
In 2024/25 the number of affordable homes approved for taxpayer cash backing dropped to its lowest level for 12 years with under 5000 begun in 2024/25.
An academic study commissioned last year by Shelter Scotland, Chartered Institute of Housing Scotland and the Scottish Federation of Housing Associations warned that if current trends in homelessness continued they expect a 3.7% rise in homelessness cases from when they last carried out analysis six years ago.
The First Minister previously reversed a near £200m cut to the provision of affordable homes in last year’s budget and was investing £768m for 2025/26.
The Herald’s seven-point charter for change to help end Scotland’s housing emergency, launched in July last year, was credited by some for sparking the change of heart on cuts. It included a call to cut the number of children living in temporary accommodation and a significant increase in the building of affordable homes.
While the Scottish Government previously pledged to deliver affordable homes by 2032, at a rate of around 11,000 a year – analysis showed that the number approved for taxpayer cash backing had dropped to its lowest level for 12 years with just 4755 new homes begun in 2024/25.
The study also points out that Scotland has already gone further than the rest of the UK in tightening rules on landlords — introducing rent controls, stronger tenant protections and stricter eviction rules. These measures limit how quickly rents can rise and make it harder and more time-consuming for landlords to remove tenants.
While designed to protect renters, they have also increased costs and reduced flexibility for landlords. Analysts say that has made some investors more cautious about entering or expanding in the Scottish market, helping to suppress activity compared with parts of England where similar reforms have yet to take full effect.
And while buy-to-let investment surged by 29% in Wales last year, growth in Scotland was just six per cent — among the weakest in the UK.
That is despite Scotland offering some of the strongest returns in the country, with all ten of the UK’s highest-yielding rental areas located north of the border.
Areas such as Renfrewshire and West Dunbartonshire are providing rental yields are close to 10 per cent. By comparison, the weakest-performing area in the South Hams of England delivered yields of around five per cent — meaning landlords in Scotland can earn almost double the return on their investment.
Alex Kerr, SNP candidate for Hamilton, Larkhall and Stonehouse said: “Be it the weekly food shop, heating your home or filling up your car – the cost of everything has soared under Labour and Keir Starmer has done absolutely nothing to help.
“This has made it virtually impossible for people to save for a deposit to get on the housing ladder. That’s why a re-elected SNP government will help first-time buyers with support of up to £10,000 to realise their dream of owning their own home.
“In government, the SNP has delivered 141,000 affordable homes meaning that Scotland has more affordable homes per head than in Labour-run England or Wales. We will now go further with the largest investment in affordable homes in the history of devolution and a new agency More Homes Scotland, to bring simplicity, speed and scale to delivery.
“By backing John Swinney’s trusted and reliable leadership by voting for an SNP majority on Thursday, voters can ensure they get a government that will be focused on supporting people with the cost of living and will always be on Scotland’s side”