House prices in Scotland increased by £4,331 in June, according to Your Move.
Its house price index found that on a monthly basis, property price growth saw a 2.6% boost during June.
This was driven by a revival in million-pound home sales in Scotland, after the introduction of the Land and Buildings Transaction Tax (LBTT) stifled the top-end of market.
Christine Campbell, Your Move managing director in Scotland, said: “The calm annual house price change of 1.2% recorded in June 2015 belies tumultuous currents of activity beneath the surface. The Scottish housing market has been buffeted around by the changing tide of taxation, but is now back in smoother waters. Average property prices surged 2.6% in June, lifting them safely to £169,227 – level with last December – after bobbing around on many ebbs and flows over the last few months.
“After a thundering wave of million-pound property sales in March, high-end purchases were beached when the Land and Buildings Transaction Tax (LBTT) first came into force and drained the activity from the top of the market momentarily. But million-pound sales are starting to make a come-back. On average in 2014, there were twelve £1million+ properties sold in Scotland during a month, and we recorded six such sales in June 2015, so we’re halfway there. As high value sales return to normal levels, this will be reflected in more buoyant house prices. We’ve already seen this start to happen, and on the mainland the biggest monthly rises were recorded by the two most expensive local authorities across Scotland – with properties in East Renfrewshire and East Dunbartonshire experiencing price jumps of 26% and 21% respectively in June.
“More generally, the LBTT front-loaded sales into the start of the year, and activity dragged its heels throughout April and May, with the General Election adding to the dampening effect. In Aberdeen sales of detached homes fell 39% between March and April. But June saw a nimble 25% month-on-month leap in home sales, flying high above what we would typically expect for this time of year, and 5% up on June 2014. Overall, Scotland saw 9,265 home sales during the month – the most activity since July 2014.
“During the second quarter of 2015, flats have seen the most significant year-on-year increase in sales, climbing 7%. This stems from the stamina of the first-time buyer market, as this property type tends to be the most affordable for those getting their first footing on the property ladder. This is especially the case in the cities, and Glasgow and Edinburgh accounted for 45% of all Scottish flat sales during Q2 2015.
“But affordability is the biggest steer to Scottish housing market at the moment. At £200,000, the average price of a flat in Edinburgh is more than one and half times as much as the cost of the typical flat in Glasgow (which stands at £120,000). As a result, Glasgow has experienced the strongest jump in house purchases overall, with Q2 sales up 18% on 2014, while Edinburgh sales have seen just a 2% upswing over the same period. Low interest rates, competitive mortgage deals, and higher average earnings have caused a swell of confidence and buyer demand – particularly in cheaper areas – but a drought of supply will keep the floodgates open to stronger price surges, and along with a future base rate rise, this could wash away options for aspiring buyers.”