MortgagesDec 17 2014

Scottish house prices recover from referendum fears

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Scottish property prices jumped 0.7 per cent - £1,200 - in October as market confidence returned following referendum fears, according to data publushed by LSL Property Services and Acadata.

The increase has seen Scottish house prices grow 5.7 per cent over the past year, typically amounting to £8,850, resulting in faster progress than across the North of England and Wales. Average house prices in Scotland now only stand £717 (0.4 per cent) below their pre-recession peak in May 2008.

Christine Campbell, regional managing director of Your Move, said: “Since the independence question evaporated, a new ray of confidence and certainty is radiating through the market, as normality is resumed.

“The feel-good factor is especially pronounced at the highest tiers of the property market, where political uncertainty froze activity most acutely. Sales of properties worth £1m or above have more than doubled from September to October, as high-end homes begin to change hands again. “

October saw the biggest number of million-pound properties sold in a single month since September 2008.

Elsewhere, Ms Campbell said that the chancellor’s revamp of stamp duty should go some way to shore up demand in the short-term, setting off more movement at the lower end of the property chain.

“First-time buyers have been the guiding light of the Scottish housing recovery, accounting for nearly half - 46 per cent - of current sales in the property market. For the bulk of these new buyers, stamp duty revisions won’t bring that starter home any closer within reach, as they don’t qualify for the tax at all.”

Dr Peter Williams, housing market specialist and chairman of Acadata, agreed that the figures seemed to reflect post-referendum optimism.

“Although one can make a strong case for saying it is wrong to draw general conclusions from the activities of the few at the top end of the market, the figures do give a sense of the return of confidence to the Scottish housing market, following the outcome of the referendum.”

He pointed out that the new Land and Buildings Transaction Tax introduced by the majority Scottish National Party government in Holyrood, would have a significant impact on this sector of the market.

“On a property costing £1m there will be an additional £33,550 of tax payable, with this level of tax increasing as prices paid for a property also increase.

“There is therefore likely to be a surge in the number of high-value properties that change hands between now and the end of March 2015, as purchasers seek to avoid the additional tax that will become payable after the tax change-over date.”

ruth.gillbe@ft.com