Scottish house prices jump 1.7% in a month
- Scottish property prices rise £2,900 during February, in biggest monthly jump since the 2007 boom years
- Average house prices set new record high of £169,742 following strongest annual growth in five years
- Aberdeen, Edinburgh, East Lothian and Angus join those setting new house price peaks in February
- February sees spike in million-pound home sales before the introduction of new transaction tax
- Overall home sales up 14% month-on-month – but still 4% below 2014 levels as election uncertainty bites
Christine Campbell, regional managing director of Your Move, comments: “The Scottish market certainly has a spring in its step. February’s vigorous 1.7% (£2,846) leap represents the highest monthly jump we’ve witnessed since June 2007, at the height of the housing boom. To put this into context, over the same period, house prices in England and Wales rose just 0.4%. Stirling experienced the fastest increase in property values across Scotland during February, with house prices soaring 5.3%.
“While growth across the rest of the wider UK has been tiring, Scotland has been dancing to the beat of its own drum. In the year to February, Scottish property prices climbed 6.0% (equal to £9,672), the strongest annual growth since August 2010. Average house prices in Scotland have now reached a new all-time peak of £169,742 – and in terms of individual areas, Edinburgh, Aberdeen, East Lothian and Angus all now join the ranks of the record-breakers.
“The impressive rise in house prices in February has been influenced by the introduction of the new Land and Buildings Transaction Tax (LBTT) in April, as high-end buyers sought to complete expensive purchases under the old stamp duty rates. Fifteen properties priced at £1 million or more were sold in Scotland during the month of February, compared to just 6 the previous month. Tactical tax considerations have helped foster price growth in the Scottish housing market, and are likely to play a significant role in the months to come too. Now that the LBTT has come into force, we expect to see a temporary drop-off in the number of properties sold above £750,000, now liable for the top rate of tax – similar to the impact we’re currently seeing in London among £2m properties in light of December’s stamp duty changes.
“Typically in the housing market cycle, we would expect home sales to ease back in February, in the aftermath of the costly Christmas period. This February moved against the seasonal grain, with completed home sales up 14% on January levels – however, activity is still 4% down on last year. Over the past three months, completed home sales have fallen in every local authority area of Scotland on an annual basis, with Midlothian seeing the sharpest 31% drop. However these year-on-year benchmarks have been artificially propped up following the extraordinary headway in sales activity over 2014, and as well as having to recalibrate onto a steadier course, the housing market this year also has an upcoming General Election to contend with. The slowdown in Scottish sales activity is being mirrored south of the border, as all across the UK political uncertainty is infusing homebuyers with a new hesitancy.
“But as soon as there is a stable government, there will be no reason to delay. Recent experience of the independence referendum reminds us that a celebratory resurgence of activity after the vote is concluded will even out any deficit beforehand. With measures like the new Help to Buy ISA, lower transaction tax for the majority under the LBTT, and rock bottom interest rates on mortgages, buyers’ prospects are already greatly boosted, and political certainty will raise consumer confidence even further.”