Average house prices in Scotland increased by £1,350, or 0.8%, in January 2016, according to the latest house price index for Scotland from Your Move and Acadata.
This is the third time in the last five months that prices have increased by this amount, which the report authors say suggests that there is stability in the growth patterns currently being experienced in the housing market, following the introduction of the Land and Buildings Transaction Tax (LBTT) in April 2015.
The average price of a home at the end of January 2016 was £171,079, which indicates that the market has almost returned to the levels seen in February 2015, prior to the introduction of the LBTT in April.
Christine Campbell, Your Move managing director in Scotland, said: “The Scottish housing market made a bracing start to the year with the highest January sales since 2008. Property transactions in Scotland are up 24% year-on-year, easily outpacing sales south of the border, as England and Wales only saw a 1% rise over the same time period. The surge in Scottish home purchases has been propelled by second-home and buy-to-let buyers eager to avoid paying the 3% Land and Buildings Transaction Tax (LBTT) surcharge. As this tax hike was only announced in December’s Scottish Budget, January’s surge in sales may only be the tip of the iceberg.
“In Midlothian, property sales have outperformed every other area, shooting up 38% over the three months November 2015 to January 2016 compared to the same three months a year ago. This growth has been aided by the lower rate of LBTT on the purchase of cheaper properties, with flat and terraced house sales accounting for the largest rise. This trend can also be seen in Glasgow, which narrowly beat Edinburgh to become the area with the highest absolute increase in sales. The only areas in Scotland which have seen a decline in sales from November to January, compared to the previous three months, are Aberdeen City and Aberdeenshire. In Aberdeen City sales have fallen by 11% in this time period, as a result of the oil crisis and the large proportion of expensive detached homes in the city which are hit hardest by the LBBT.
“Scottish house prices have also been on the move, rising 0.8% (£1,346) this month, almost triple the 0.3% (£492) uplift seen in December. January marks the sixth consecutive month of year-on-year growth in house prices, as the market finds a sturdy footing, putting the shaky start to 2015 behind it. The boost in property values has been driven by improving economic conditions, with employment in Scotland at an all-time high. However, this stability may be under threat if the effects of the impending LBTT surcharge mirror those seen with the introduction of the original tax. There could soon be a swift peak in prices as investors rush to buy before the surcharge comes into force, followed by a dip in home values after the implementation of the surcharge.
“Stirling has seen the most significant upswing in house prices of any area, with double digit annual growth. The value of a typical home in Stirling has soared 13.5% (£24,508) year-on-year. This advance has been fuelled by Stirling Council’s programme to build 210 new properties in the area, with an additional investment of £9 million planned for 2016.
“A further boost was provided by the recent sales of two million pound homes in the countryside close to the city, possibly as second-home purchases are brought forward to avoid the LBTT surcharge.”