The latest Your Move/Acadata monthly index has indicated that property prices in Scotland fell at their greatest rate since 2009, but experts feel that new property tax bands are the contributing factor.
Property prices north of the border fell by 1.6% in April. This resulted in £3,000 being shaved off the average property price, which now stands at £184,970. More positively, prices are still 14.6% greater than they were at the same period last year, with sales also up 4% annually. What’s more, sales climbed by 18% on a month-by-month basis.
Despite the fall in average values, the index suggests that a large part of this is down to the introduction of the Land and Buildings Transaction Tax. Introduced in April, this saw a number of transactions in the higher price brackets rushed through to avoid paying the increased tax.
It was reported that buyers urged through 83 sales over £1m during March, in comparison to the average monthly total of 12. 46 homes were sold in just 3 days, but no properties totaling £1m or above were sold in April.
The largest drop in prices was recorded in East Lothian, where values dropped by 7.2%. However, significant rises were recorded in the islands of Orkney and the Shetlands, where prices rose by 9.1% and 4.4% respectively.
‘Reforming Scottish stamp duty was always going to ruffle a few feathers in the market,’ said Christine Campbell, Your Move managing director in Scotland. ‘After a spectacular 9.4% leap during March ahead of the Land and Buildings Transactions Tax, average Scottish house prices subsequently fell by the sharpest fall we’ve seen since March 2009, when the housing market was at the lowest ebb of the housing crisis.’
She continued by saying that, ‘the Scottish housing market put on a high-octane performance in March, as high end buyers raced against the clock to snap up million-pound property before the higher rates of stamp duty came into play. This magnified the average price paid in March, but now the market is re-focusing.’
Average property prices fall in Scotland
Campbell also pointed out that, ‘with double-digit growth still pervading, the housing recovery doesn’t appear too shaken and this short-term hiccup has been concentrated in higher priced areas.’
Data reveals that there were 8,203 house sales in Scotland during the month of April, with levels increasing from 2014. This is in contrast to England and Wales, where sales have been falling year-on-year during the last six-months.
Additionally, the research reveals that stamp duty changes have certainly increased the rate of purchasing in the first months of the year. There were 237 more homes sold in Edinburgh this year in comparison to last, with 96 of these transactions occurring in March, as people sought to beat the pre-tax deadline.
Campbell noted that with the tax changes now in place, Scottish buyers building homes under £254,000 should benefit from the lower costs. She stated that, ‘the momentum in the market should continue into the summer, even if prices are reined in over the short term by a slower top end until they adjust to the new banding.’