House prices rise in Scotland as market shakes off effect of new listing tax

House prices in Scotland increased by 1.1% in August, only the second month of growth since the new Land and Building Transaction Tax was introduced in April.

It takes the average house price to £167,426, back above December 2014 levels and the annual rate of growth was also 1.1%, the data from the Your Move index shows.

When it comes to transactions it was the strongest August for sales in eight years with activity up 7.5% on an annual basis and Scotland saw faster annual sales growth over the summer than anywhere else in the UK.

The data also shows that it is semidetached homes that are driving price rises and sales growth followed by a 4% increase in flat purchases compared to a year earlier. In contrast, sales of more expensive detached listings are down 4% year on year.

Christine Campbell, Your Move managing director in Scotland, said that the market is starting to shake off the side effects of April’s LBTT after the tax change caused a three month decline in house prices between April and June.

‘LBTT has slowed high value listing sales considerably. The number of million pound listing sales has fallen to an average of four per month over the last five months, down from 12 in 2014. But it’s not just at the very extremes that this has had a dampening effect  and the brakes have been applied to all sales above £254,000,’ she explained.

‘As a result of the tougher top end tax rates, the most expensive parts of the country have recorded price falls year on year, and this is starting to close the price gap between Scotland’s preeminent cities,’ she added.

The index also shows that on an annual basis, house prices in Glasgow have increased by 6.5% to reach £141,871, compared to a 3.4% decrease of listing values in Edinburgh since last year.

‘As the area with the highest house price across Scotland, Edinburgh’s price fall encapsulates the current trend of declining house prices in high value areas qualifying for higher rates of transaction tax,’ said Campbell.
 
But the middle and the lower tiers of the market have been boosted by the LBTT which has stimulated demand at the bottom and middle rungs of the listing ladder. 

‘Overall, the activity emanating from the bottom of the listing market means that from June to August 2015, Scotland has experienced the strongest year on year increase in listing sales of any other part of Britain, with sales climbing 6%,’ said Campbell, adding that sales volumes were down by 2% across England and Wales and seven regions saw sales fall over the same period.

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Source: Property News Spain