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Scottish House Prices Increase Faster Than The Rest Of The UK
The latest figures make good reading
Residential property prices in Scotland leapt by 1.9% in April this year, after a flat March. If we ignore the price spikes in 2015 and 2016 caused by changes to the Land and Buildings Transaction Tax, this is the biggest increase since 2007. Which means it’s the biggest increase since before the financial crisis.
Does this mean the hard times are over? What’s driving the increase? And is it sustainable? Here we look at the figures in more detail and see what they mean for the Scottish property market’s future.
Why the increase in prices?
The increase is mainly down to first-time buyers. They’re taking advantage of the ongoing low interest rates and (relatively) low deposits. However, they’re influencing the market in pockets, rather than across the entire market. So some local markets are seeing stronger growth than others. The number of first-time buyers rose by over 20% in the first quarter of 2017.
In contrast, sales of properties over £750,000 are significantly lower than last year. For comparison, in April 2016 27 properties in this category were sold. This year the figure was down to 17.
How does Scotland compare?
This increase in prices is larger in Scotland than it is in England, Wales and Northern Ireland. In the year to April, prices in Scotland rose by 6.8%, reaching an average of £146,000. England saw a 5.7% increase giving an average of £237,000, Northern Ireland saw a 4.3% rise (to £124,000) and Wales saw a similar 4.2% increase (to give an average house price of £148,000).
Will the price increases continue?
In short, yes. The market has seen an increase in properties becoming available for first-time buyers. But this is due, mainly, to the low interest rates. We believe prices are set to continue to rise, due to the increase in demand for houses and the current weakness in supply. We’ll know more as the Scottish Government sets out its plans for the housing market and look forward to seeing their plans to increase house-building across Scotland.
Are these increases happening across the country?
Yes and no. There are a number of areas enjoying strong economic growth, leading to increasing employment opportunities. In these areas, prices are being pushed up. In other areas, where the economy isn’t performing as well, prices are actually falling.
In East Dunbartonshire, they saw the biggest percentage increase in prices, with an 11.2% increase to give an average of £202,466. However, in Aberdeen prices fell by 4.3% to an average of £167,630.
The top five areas where demand is high in Scotland are Glasgow City (722 sales), Edinburgh (562), Fife (356), North Lanarkshire (351) and South Lanarkshire (313).
How to approach your local market
It seems simple, but make sure you do your research. Watch out for any political and economic uncertainty that could impact prices – if you’re a buyer you’re looking for something to knock confidence and lower prices. If you’re selling you’re looking for stability and economic growth to deliver strong prices.
Given the recent election and the ongoing Brexit talks, the economy looks set for a continued period of change and instability. So, in the short term at least, house prices look set to continue to rise.