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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
Farmland prices in England reach new record, but prices are stabilising
The average price of English farmland hit a new record price of £8,306 an acre in the third quarter of the year, but values rose by just 0.5%, the latest index shows. Year on year growth the sector has seen price growth of 8% but this has slowed after a period of exceptional growth, according to the data from real estate firm Knight Frank. The report shows that over five years growth has averaged 43% and 198% over the last decade so a slowdown was to be expected, particularly as availability has started to increase and agricultural commodity markets remain weak. The big question now is whether prices will actually start to fall. ‘Our view is that in terms of supply and demand the farmland market has now reached a state of equilibrium,’ said Andrew Shirley, head of rural research at Knight Frank. ‘This means that while prices may rise or fall slightly on a quarter by quarter basis over the next year or two, we are unlikely to see the price growth of the past 10 years significantly eroded, unless supply increases substantially or demand drops off drastically,’ he added. The report forecasts a period of potential price stability and points out that over the past five years farmland has outperformed many other asset classes, including gold which is down 10%, and it has even kept pace with London’s luxury residential market which has seen growth of 43% over the same period. ‘This strong performance brought new buyers into the market, including a wide range of investors from both the UK and abroad. However, potential purchasers, particularly farmers, have gradually become more considered in their approach to acquisitions since the beginning of 2015,’ the report says. ‘This is partly due to a prolonged period of low commodity prices, but also reflects the perception that the market was reaching a peak,’ it adds. The report explains that the availability of farmland has also increased. So far this year around 20% more land has been advertised publicly compared with 2014. ‘As a result, what we are experiencing now is a market that is much more in equilibrium in terms of the balance between supply and demand. Prices are unlikely to fall or rise to any great extent over the next few years because buyer demand remains strong, albeit cautious,’ said Shirley. ‘Supply, while up on the year, is also low in historic terms and the market is unlikely to be saturated,’ he commented, adding that a sudden upwards shift in interest rates could put some pressure on more farmers to sell up, but the indications from the Bank of England seem to point to a gradual rising of rates starting in the second half of 2016. Price variability on a local, as well as a regional level, is also likely to grow as a dominant theme of the market, he suggests. ‘Extremely high prices will continue to be paid for large blocks of top quality… Continue reading
UK property demand now higher outside of London, says market report
Demand for property in the UK is now higher outside of London, increasing by 5% since the second quarter of the year, according to latest market intelligence report. Bexley remains the hottest spot in the UK with demand climbing a 3% quarter on quarter to 77%, followed by Watford at 72%, Bristol at 71%, Reading at 68% and Barking at 65%. The rest of the top 10 is made up of Sutton at 64%, Cambridge at 67% and Medway, Havering and Brentwood all on 64%, the property hotspot index from online estate agent eMoov shows. The London Borough of Ealing has seen the most drastic turn around in property demand with growth of 74%, although at an index figure of 38%, demand in the area is still relatively low. Aberdeenshire is the coldest spot in the UK with demand at just 10% and demand in the area has halved since the third quarter of 2014. Highland is the only other Scottish region in the top 10 coldest spots, with demand at just 17%. Westminster at 15% and Kensington and Chelsea at 17% are the only London entries, with the other six coldest locations all located in the North West. Camden is the fifth biggest faller over the course of the year, with demand reducing by a quarter year on year with Westminster down 33% and Islington down 15%. The rest of the year’s biggest fallers are again, located across the north of the country. ‘In early 2014, we predicted the ripple effect London as an individual, market would have on the UK property market. Although there are pockets of the capital that have enjoyed sustained demand, it’s the commuter belt that is currently top for property demand in the UK,’ said the firm’s chief executive officer Russell Quirk. ‘The uncertainty of the situation in Aberdeenshire and the local oil industry, seems to have had serious repercussions to the local property market. Not only is it bottom, but demand has halved in just a year. Unfortunately there can only be one consequence to property prices in the area, which is inevitably a drop,’ he added. Continue reading
