Christine Campbell, Your Move managing director in Scotland, comments: “Scottish property sales hit a seven-year pinnacle in July, recording the highest number of home purchases during a single month since July 2008. Activity has been picking up speed in recent months, and sales volumes climbed 6% month-on-month to reach 9,775 in July. Lower stamp duty for purchases below £325,000 under the Land and Buildings Transaction Tax (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. 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. Stirling saw the biggest leap in property sales month-on-month in July, up 49%, and here the most commonly sold properties are 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.
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 Q2 2014 to Q2 2015 as a result of this burgeoning demand. Total supply of new build housing in Scotland has reached its highest level since 2010/11. Glasgow has witnessed the biggest rise in new homes built in the past year (at 2,267 units), 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 twelve months.
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. 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.”
