Residential property sales reach a seven year high in Scotland
Home sales reach in Scotland reached a seven year high in July and prices increased by 0.4% compared to the previous month, the latest index data shows.
Overall sales were up 6% but annual price growth slipped 0.1%, taking the average house price to £165,162, according to the Your Move index.
The report says that the jump in sales is due to buyers capitalising on lower stamp duty under the new Land and Buildings Transaction Tax (LBTT) which was introduced in April of this year.
Activity is growing at a time when the supply of new build housing in Scotland reached its highest level since 2010/2011 but there is some hesitation at the higher end of the market which the report says is the reason why prices are now overall 0.1% lower than a year ago.
‘Activity has been picking up speed in recent months. Lower stamp duty for purchases below £325,000 under the (LBTT) first got the ball moving in April. Since then, the conclusion of the general election, supply of new build homes and the favourable mortgage rate environment have only added to this momentum,’ said Christine Campbell, Your Move managing director in Scotland.
‘After a slightly sluggish start to 2015, sales in the first seven months are exceeding those in 2014. It’s the middle and lower end of the housing market where the tempo is really quickening,’ she added.
Indeed, the data shows that Stirling saw the biggest leap in property sales month on month in July, up 49%, with the most commonly sold properties flats.
‘Across Scotland overall we’re witnessing fewer top end home sales in 2015 than in 2014, due to the steeper transaction costs now incurred. The proportion of homes in Scotland sold for more than £325,000 has fallen from 9.2% of all property sales in July 2014, to just 7.8% a year later under the revised taxation system,’ said Campbell.
‘At the same time, there’s been a lot of propulsion emanating from the first time buyer market, feeding off a flurry of new build housing. Our analysis shows that the average price of a first-time buyer property has risen 6% from the second quarter of 2014 to the second quarter of 2015 as a result of this burgeoning demand,’ she explained.
The data also show that total supply of new build housing in Scotland has reached its highest level since 2010/2011. Glasgow saw the biggest rise in new homes built in the past year followed by Aberdeenshire and Edinburgh, helping these areas become the first port of call for many new buyers looking to climb onto the property ladder.
‘With housing market activity mostly concentrated at the lower rungs of the property ladder, and a dearth of top end property purchases, overall Scottish house prices have dropped marginally year on year. As of July 2015, average house prices in Scotland are down 0.1% annually, equivalent to falling £176 in 12 months,’ Campbell pointed out.
‘But this looks to be a short term symptom, and growth is starting to shore up. On a monthly basis, property values have seen a 0.4% uplift in July, on par with the growth recorded south of the border across England and Wales the same month,’ she said.
‘More expensive areas are starting to see price growth return, following the immediate stagnation in the aftermath of the introduction of the LBTT, and it was the area with the highest average property values which saw the strongest monthly growth. Edinburgh saw the biggest boost in prices during the month, up 3.7% since June, as top end buyers start to swallow the new stamp duty costs after the initial shock,’ she added.