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House prices rise in Scotland as market shakes off effect of new property tax
House prices in Scotland increased by 1.1% in August, only the second month of growth since the new Land and Building Transaction Tax was introduced in April. It takes the average house price to £167,426, back above December 2014 levels and the annual rate of growth was also 1.1%, the data from the Your Move index shows. When it comes to transactions it was the strongest August for sales in eight years with activity up 7.5% on an annual basis and Scotland saw faster annual sales growth over the summer than anywhere else in the UK. The data also shows that it is semidetached homes that are driving price rises and sales growth followed by a 4% increase in flat purchases compared to a year earlier. In contrast, sales of more expensive detached properties are down 4% year on year. Christine Campbell, Your Move managing director in Scotland, said that the market is starting to shake off the side effects of April’s LBTT after the tax change caused a three month decline in house prices between April and June. ‘LBTT has slowed high value property sales considerably. The number of million pound property sales has fallen to an average of four per month over the last five months, down from 12 in 2014. But it’s not just at the very extremes that this has had a dampening effect and the brakes have been applied to all sales above £254,000,’ she explained. ‘As a result of the tougher top end tax rates, the most expensive parts of the country have recorded price falls year on year, and this is starting to close the price gap between Scotland’s preeminent cities,’ she added. The index also shows that on an annual basis, house prices in Glasgow have increased by 6.5% to reach £141,871, compared to a 3.4% decrease of property values in Edinburgh since last year. ‘As the area with the highest house price across Scotland, Edinburgh’s price fall encapsulates the current trend of declining house prices in high value areas qualifying for higher rates of transaction tax,’ said Campbell. But the middle and the lower tiers of the market have been boosted by the LBTT which has stimulated demand at the bottom and middle rungs of the property ladder. ‘Overall, the activity emanating from the bottom of the property market means that from June to August 2015, Scotland has experienced the strongest year on year increase in property sales of any other part of Britain, with sales climbing 6%,’ said Campbell, adding that sales volumes were down by 2% across England and Wales and seven regions saw sales fall over the same period. Continue reading
Concerns voiced about new simplified tenancies bill in Scotland
Simplified residential tenancies are now being introduced in Scotland but experts warn that more needs to be done to maintain supply in the private rented sector and attract more investment. Scottish Housing Minister Margaret Burgess said the changes outlined in the Private Tenancy Bill will give tenants greater security and stability in their home and community. ‘It will also give landlords reassurance that their tenants will treat their property as a long term home, rather than somewhere temporary,’ she pointed out. ‘The private rented sector is changing. It is now home to a growing number of people in Scotland, and we recognise there are some areas where rents are increasing significantly. It is right and responsible to give local authorities the ability to introduce rent controls in order to ease areas under pressure,’ she added. The Scottish Association of Landlords said there while there is a broad agreement that the rental regime in the private rented sector needed to be modernised as part of a drive to increase standards and protect tenants, there are concerns that it could harm investment in a sector which is said to have a key role to play in solving Scotland's long term housing crisis. ‘We have particular concerns about measures such as rent controls, as well as removing the right of a landlord to end a lease naturally, subject to a reasonable notice period,’ said SAL chief executive John Blackwood. ‘While we understand the political pressure to tackle rent rises in hotspots such as Aberdeen and Edinburgh, we are concerned these measures could harm investor confidence and drive landlords out of the market, leaving a vacuum that could be filled with less than scrupulous individuals,’ he explained. ‘The way to reduce rent levels in a sustainable manner is to increase housing supply, not punishing landlords that are investing tens of thousands of pounds in their properties,’ he added. According to Scottish Land & Estates the sector also needs to attract new investment, especially in rural areas. Its members are at the forefront of supplying rural housing across the country, many at affordable rents, and the organisation said there were many positive elements to the Bill but that certain elements could impact on rural housing supply. ‘We welcome the degree of clarity that the introduction of the Bill has provided and we can see that there are many positive elements to the government’s proposals. The simplification of the tenancy regime is something that we have long argued for and it is pleasing that the Scottish Government has made a concerted effort to address the need for reform,’ said Katy Dickson, policy officer for business and property at Scottish Land & Estates. She explained that the introduction of a single notice to leave system, with robust and reasonable grounds on which to end a tenancy is to be welcomed, and increased notice periods will hopefully address many of the concerns regarding security and certainty raised during the… Continue reading
Irish property prices continue to see sustained growth
Property prices in Ireland increased nationwide by 2.3% in August and are up 9.5% compared to a year ago, the latest official data shows. In Dublin property prices rose by 2.8% in August and were 8.2% higher than in August 2014. A breakdown shows that house prices are rising faster than apartments at 3% and 0.3% respectively. However, the index report from the Central Statistics Office says that it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series. In the rest of Ireland, excluding Dublin, prices rose by 1.9% in August and were up 10.8% compared with August 2014. This means that at a national level residential property prices were 35.4% lower than their peak level in 2007 and excluding Dublin residential prices were 38.7% lower than their highest level in 2007. In Dublin house prices were 34.4% lower than the peak, apartment prices 40.4% lower and Dublin residential property prices overall 36.2% lower than their highest level. However, there are concerns that house prices are growing too fast. The Irish economy grew by a Eurozone record of 7.2% in the second quarter and according to the Organisation for Economic Development and Coordination (OECD) is set to grow by 5% overall in 2015 and 4% in 2016. But the OECD is concerned that rapidly rising house prices still pose one of the biggest risks to financial stability and an uncontrolled property boom would ‘increase vulnerabilities, especially if it were associated with further indebtedness’. Its latest review says that such strong price rises may again spark a reinforcing spiral of higher property prices and credit leading to another misalignment of property prices and eventual burst that causes large losses in the banking sector. ‘To avoid repeating past mistakes, now is the time to build resilience against future nasty surprises while ensuring the recovery is sustained, and its benefits broadly shared,’ said Angel Gurría, secretary general of the OECD. The OECD suggested that the Irish government should take measures to cool the market, such as avoiding subsiding first time buyers and encouraging growth in the rental market. Continue reading
