Upswing in Properties Coming to Market and Property Prices
There are encouraging signs of an upswing in properties coming to market in east central Scotland which is good news for buyers. The number of homes brought to market between April and June 2018 increased by 3.2% compared with the same period last year, according to the latest house price report by ESPC.
Demand for properties remains high. Average selling prices increased by 4.9% across east central Scotland in the second quarter of 2018, compared with last year, and by 5.1% in Edinburgh. The median time to sell across east central Scotland in the second quarter of 2018 was one day slower compared with the second quarter of 2017, with half of all properties going under offer within 17 days, and within 16 days in Edinburgh.
There is also a continued trend towards homes achieving over Home Report valuation. The percentage of sales achieving or exceeding their Home Report valuation rose from 78.0% between April and June 2017 to 82.3% in 2018.
The number of properties sold across east central Scotland over the last three months decreased by 6.3% annually, a reflection of the decrease of properties coming to market in recent years rather than a decrease in buyer demand.
ESPC’s Business Analyst Maria Botha-Lopez said: “A shortage of properties coming to market has been a key pressure point for the residential housing market in Edinburgh, the Lothians and Fife in recent years, so a positive upswing in the number of properties being listed reported by ESPC is an encouraging sign for buyers and those looking to take their next step on the property ladder.”
Looking at Scotland as a whole, recent figures from the UK House Price Index show that average prices in Scotland continued their upward trend in May with an increase of 4.9 per cent when compared to May 2017. The average price of a property in Scotland in May 2018 was £149,004. The biggest price increases were in West Dunbartonshire, City of Edinburgh and East Renfrewshire and the largest decreases were in Aberdeenshire, Angus, Inverclyde and Perth & Kinross.
New Tax Relief for First-Time Property Buyers
New tax relief for first-time property buyers came into effect in Scotland from 30 June 2018. The threshold for Land and Buildings Transaction Tax ( LBTT) (the Scottish version of Stamp Duty) is now £175,000 rather than £145,000. However, first-time buyers of properties over £175,000 also benefit from the relief. Read more about this, and how to calculate your costs, here.
Scottish House Prices to Rise 20% in Five Years
House prices will grow faster in Scotland than anywhere else in the UK this year, according to new research by PwC which predicts the average Scottish home will cost 20% more in 2022 than in 2017.
The findings, part of PwC’s July 2018 UK Economic Outlook, indicates that house prices will increase by 4.8% in 2018, outpacing the UK average. House price growth in Scotland will slow to 3.4% in 2019, still ahead of the UK average of 2.8%. Between 2020 and 2022 the growth in house prices in Scotland are predicted to average 3.6%, ahead of a 3.4% UK average.
This means that the average house price in Scotland, which was £143,000 in 2017, will increase by 20% to £172,000 in 2022. This comes as housing sales volumes in Scotland declined 9.1% year-on-year to February 2018.
Fewer Scots Moving Home
A Bank of Scotland review suggests there has been a slowdown in the number of Scots moving home in the first half of this year. The review found 15,300 people moved house in the first six months of 2018, compared with 16,200 over the same period last year.
The bank said the home-mover market has stagnated in the first half of this year: “The low availability of the ‘right type’ of homes for those looking to move up the housing ladder may have constrained market activity. And while Scottish home-movers haven’t seen price increases quite on par with the rest of the UK, the change in house prices and deposits required have still increased by a significant amount and may also be contributing to the recent slowdown of people moving home.”
Interest Rates Going Up?
We could be in for higher borrowing costs as economists expect interest rates to go up on 2 August 2018. Doubts had been cast on a rise after inflation held steady at 2.4% instead of rising to 2.6% as had been expected, however economists suggest that an interest rate rise is still more likely than not.
If the Bank of England does raise the ‘base rate’ from 0.5% to 0.75%, it would be the highest it has been since March 2009, when it was cut from one per cent to 0.5 per cent during the financial crisis.
From Our Point of View
Following on from the football World Cup, July 2018 has been a game of two halves. The first half of July was particularly busy both in terms of property sales and also sellers instructing MOV8 to market and sell their properties. The second half the month was then comparably quiet on both of these fronts. A combination of school holidays and people enjoying the unseasonably hot weather seems to have temporarily slowed activity down on these fronts.
However, there are strong signs that property sellers and buyers are ready to start doing business again in greater numbers. The number of Property Viewings booked in the last full week of July was up by more than 30% compared with any previous week in the month and the number of Valuation Appointments similarly spiked in that week. It seems that warm weather will only stall buyer and seller activity for so long!
There continues to be a gulf between the level of buyer demand and supply of new properties coming to the market for them to purchase. For as long as this continues, it will be a challenging market for buyers. This, in turn, affects the number of properties coming to the market with many potential sellers waiting until they have first identified their dream home.
If interest rates do rise in August, this may slightly cool buyer demand which currently, by far, outstrips supply of properties to the market. If purchasers are more easily able to secure their own dream home, this may have a positive knock-on effect on the supply of new properties coming to the market, helping to ease the current upward pressure on prices which continue to rise quite sharply in east central Scotland.
We’re Here to Help
If you are thinking of selling your home or investment property, get in touch with us by calling 0131 202 5444 (Option 1) or by emailing [email protected] to organise a free valuation of your home or to get a full, transparent breakdown of the costs of selling your home.
You can also now instantly book a free valuation appointment, online, by following this link.