Home prices and sales up in Scotland after listing tax blip

House prices in Scotland increased by 2.6% in June, taking the average price to £169,227, according to the latest index figures, with sales up 25% month on month.

It means that year on year prices have increased by 1.2% over a period that have seen a number of changes in the listing market including the introduction of the new Land and Buildings Transaction Tax (LBTT) tax earlier this year in April.

There was a flurry of sales at the upper end of the market before the tax was introduced and a dearth of sales in this sector afterwards but the Your Move index shows that June’s price growth was driven by a revival in million pound plus sales.

The data also shows that home sales surged 25% in June compared with May, reaching the highest monthly total since July 2014. Glasgow saw the strongest jump in sales activity in the second quarter, up 18% in the past year on back of increased demand for flats.

‘The calm annual house price change of 1.2% recorded in June 2015 belies tumultuous currents of activity beneath the surface. The Scottish housing market has been buffeted around by taxation,’ said Christine Campbell, Your Move managing director in Scotland.

She pointed out that on average in 2014, there were 12 £1million plus listings sold in Scotland during a month, but in June 2015 there were six, signalling an improvement in this sector of the market in just one month.

On the mainland the biggest monthly rises were recorded by the two most expensive local authorities across Scotland with listings in East Renfrewshire and East Dunbartonshire experiencing price jumps of 26% and 21% respectively in June.
 
‘More generally, the LBTT front loaded sales into the start of the year, and activity dragged its heels throughout April and May, with the general election adding to the dampening effect,’ added Campbell.

In Aberdeen, for example, sales of detached homes fell 39% between March and April. But June saw a 25% month on month leap in home sales, higher than what would typically be expected for this time of year, and 5% up on June 2014.

Overall, Scotland saw 9,265 home sales during the month, the most activity since July 2014 and during the second quarter of 2015 flats have seen the most significant year on year increase in sales, up 7%.

‘This stems from the stamina of the first time buyer market, as this listing type tends to be the most affordable for those getting their first footing on the listing ladder. This is especially the case in cities, and Glasgow and Edinburgh accounted for 45% of all Scottish flat sales during the second quarter of 2015,’ said Campbell.
 
‘But affordability is the biggest steer to Scottish housing market at the moment. At £200,000, the average price of a flat in Edinburgh is more than one and half times as much as the cost of the typical flat in Glasgow which stands at £120,000,’ she explained.

‘As a result, Glasgow has experienced the strongest jump in house purchases overall, with sales up 18% in the second quarter compared with the same period in 2014, while Edinburgh sales have seen just a 2% upswing over the same period.  Low interest rates, competitive mortgage deals, and higher average earnings have caused a swell of confidence and buyer demand, particularly in cheaper areas,’ she said, adding that a lack of supply will keep the market open to stronger price surges.

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Source: Property News Spain