20th August 2026
The latest housing figures from the Office for National Statistics contain something of a surprise for anyone who has been following the UK property market.
House price growth is slowing, while rents are beginning to accelerate again. But when we look beneath the UK figures, Scotland is following a rather different path and in Highland the pressure on renters is already considerably greater than the Scottish average.
That is worth paying attention to because housing costs are one of the biggest factors determining whether people actually feel better or worse off.
The ONS figures published today show that average private rents across the UK increased by 3.7% in the year to July 2026, reaching £1,393 a month. That is up from annual growth of 3.3% in June.
Scotland remains considerably cheaper than the UK average. The average private rent was £1,016 a month in July, an increase of 1.7% over the year. England's average was £1,451, with rents increasing by 3.8%, while Wales recorded an increase of 4.5%.
At first sight, that looks like good news for Scottish tenants.
But there is an important qualification.
Scotland's annual rental inflation rate has now increased for the second consecutive month, following almost three years of generally slowing rent growth. The ONS says rents increased by 0.7% between May and July this year, compared with no growth over the same period last year.
That could be the beginning of a change in direction.
It is also important to understand that the Scottish figures are not quite comparable with the rest of the UK because the data have historically been dominated by advertised new lets. The ONS and Scottish Government are improving the collection of achieved rents, but the distinction matters when trying to determine what existing tenants are actually paying.
The wider Scottish evidence is nevertheless interesting.
The Scottish Government's latest housing market review, published in July, found that rental inflation had slowed dramatically from the extraordinary increases seen during the cost-of-living crisis. Citylets data showed annual growth in new-let rents falling from a peak of 13.7% in the third quarter of 2023 to a small fall of 0.4% in the first quarter of 2026.
Rightmove's figures were showing modest growth of 1.2% over the same period. In real terms, allowing for inflation, Scottish rents were actually falling.
That sounds encouraging, but the latest ONS figures suggest that period of relief may be coming to an end.
And this is where Highland becomes particularly interesting.
The ONS's local housing data show that average private rents in the Highland and Islands Broad Rental Market Area reached £726 a month in June 2026, up from £698 a year earlier. That represents a 4.0% increase — considerably higher than the 1.3% increase recorded across Scotland at the time.
There is an even more revealing detail.
For one-bedroom properties in Highland and Islands, rents were up by 5.2% over the year. Flats and maisonettes increased by 5.3%. Four-bedroom and larger properties increased by only 1.2%.
That tells us something about where the pressure is concentrated. It is not necessarily the larger family home that is seeing the biggest increases. The sharper movement is appearing towards the smaller properties that are particularly important to single people, younger workers and households trying to get into the private rented sector.
The average Highland and Islands rent in June was £528 for a one-bedroom property, £701 for two bedrooms, £916 for three bedrooms and £1,433 for four or more bedrooms.
Those figures cover the broad rental area rather than Highland council alone, but they provide a useful indication of the housing costs facing people across the north.
There is another longer-term statistic that I find particularly striking.
Scottish Government figures show that between 2010 and 2025, the average Scottish two-bedroom private rent increased from £554 to £921 — a rise of 66.3%.
In Highland and Islands the increase was 44.5%, taking the average two-bedroom rent from £503 to £727.
For one-bedroom properties, Highland and Islands saw an increase of 41.2% over the same period, from £415 to £586.
So although Highland has not experienced the extraordinary long-term rental increases seen in some parts of central Scotland, rents have still risen substantially.
And we should not forget that wages in Highland have not necessarily risen at the same rate as housing costs.
That is one reason why the housing debate cannot simply be about whether rents are higher or lower than Edinburgh, Glasgow or London. What matters to an individual household is the relationship between rent and income.
A £700 monthly rent may look inexpensive beside a £1,400 London rent, but if household income is considerably lower, the burden can be just as serious.
The situation for people trying to buy is somewhat different.
The ONS estimates that the average Scottish house price was £195,000 in June 2026, up 2.3% over the year. That compares with UK-wide house price growth of just 2.0%. However, Scottish annual growth has slowed significantly from 4.9% in May.
The Registers of Scotland figures tell much the same story. Its latest April figures put the average Scottish property price at £192,000, with annual growth of 2.8%.
Highland again looks somewhat different.
The ONS local figures put the average Highland house price at £220,000 in May 2026, up 3.6% on the year. The average price paid by a first-time buyer was £177,000, up 2.1%.
So Highland is experiencing slightly stronger house price growth than Scotland as a whole, while at the same time experiencing significantly faster rental inflation.
That combination deserves attention.
It means someone unable to buy a property is facing rising rents, while someone trying to save a deposit is watching property prices continue to move upwards.
The good news is that house prices are not currently racing away as they did during some previous housing booms. The ONS says UK annual house price inflation has slowed for the second consecutive month, and the Scottish annual rate has also weakened.
That gives prospective buyers some breathing space.
Mortgage rates and household finances remain the bigger question. If interest rates stay relatively high while energy and food prices also increase, many potential buyers will struggle to meet lenders' affordability tests even if the house itself is not becoming dramatically more expensive.
That could create an unusual housing market in which property prices are relatively subdued but buying remains difficult.
For Caithness, I think there is a further issue which the national statistics do not capture particularly well.
We regularly hear about the need for more housing in the Highlands, and the argument is often presented in terms of the number of houses required. But the type of housing matters just as much.
A shortage of affordable one and two-bedroom properties can create a very different problem from a shortage of larger family houses.
If rents for smaller properties rise by 5% or more, younger workers and people on modest incomes can find themselves spending an increasingly large proportion of their wages simply keeping a roof over their heads.
That affects businesses too.
A business looking to recruit someone to Caithness may be able to offer a perfectly respectable salary, but if the prospective employee cannot find an affordable place to live, the job may never be filled.
Housing is therefore not simply a social issue. It is an economic issue.
A shortage of affordable housing can restrict recruitment, make it harder for young people to remain in the area and make it more difficult for businesses to expand.
That is why I think today's ONS figures are worth more than a passing glance.
The headline story is that Scottish rents are still rising much more slowly than those in England and Wales.
But the more interesting story is that Scottish rental inflation appears to be turning upwards again, while Highland and Islands is already experiencing rental increases well above the Scottish average.
At the same time, Highland house prices are rising faster than the Scottish average, even though overall Scottish house price growth is slowing.
Put those figures alongside the other pressures we have been discussing — higher energy costs, rising fuel prices and the possibility of renewed food inflation — and the housing question becomes even more important.
For someone renting in Caithness, a 4% or 5% increase in rent does not occur in isolation. It arrives alongside the rest of the household bills.
For a business, the consequences can be equally significant. Employees need higher wages to cope with higher housing and living costs, while employers are simultaneously facing their own increases in energy, transport and other costs.
That is the housing squeeze I think we need to watch.
The immediate figures do not suggest a new property boom. In fact, the opposite may be true in much of Britain.
But a slowing housing market does not necessarily mean housing is becoming affordable.
For many people, particularly those renting rather than owning, the real problem is that the price of having somewhere to live remains stubbornly high even when house price inflation itself is slowing.
And here in Highland, the latest figures suggest that pressure may already be returning.
Read the full ONS report at
https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/privaterentandhousepricesuk/august2026