Annual Scottish house price growth hits four-year high

Annual Scottish house price growth has hit a four-year high – yet still only a third off the pre-crisis rate according to the recent LSL Scotland HPI

Scottish house prices rose £8,890 (5.7%) in a year – outpacing most areas of UK with home sales up 15% in June, back on course after spring lull.

Activity and price growth is being driven primarily by Edinburgh and Glasgow. Average prices are still 0.9% off pre-crisis peak, and half of Scotland saw prices drop in June.

Gordon Fowlis, regional managing director of Your Move, an estate agency chain that is part of LSL, comments: “On the home straight to polling day, the Scottish housing market is fighting fit ahead of the independence battle, and showing the highest annual growth in four years. Average property prices have risen £8,890 (or 5.7%) in the last twelve months, the biggest rise we’ve experienced since September 2010. This is stronger than the annual rises in the North of England, the Midlands and Wales. While the majority of regions across England and Wales are witnessing price falls, the Scottish market is moving the other way. In Aberdeenshire, prices climbed to a new high of £228,802 last month. Overall, average house prices in Scotland are now only 0.9% below their May 2008 peak, and this gap is narrowing. Many households are feeling the weight lift off their shoulders, as consumer confidence in the economic recovery mounts.

“The housing market may have been temporarily subdued in the immediate clamour surrounding the MMR regulatory changes, but activity is again apparent, and sales rose 15% in June, up 26% on the previous year. This is a step in the right direction, but there is plenty of gas still left in the tank. In the first six months of this year, property transactions totalled 42,200, which is just half of the volume in 2007/08.

“In reality, it’s a tale of two cities that is really leading the narrative. A quarter of all house sales across Scotland in June were in Glasgow and Edinburgh, pushing average property prices in these cities up 4.5% and 4.2% respectively over the course of the month. Flourishing first-time buyer demand has also played a significant role to date. Overall in Scotland, sales of flats have increased the most in the first half of 2014 – increasing 28% on the same six months of last year. However, now that the Help to Buy scheme has suspended its funding, it remains to be seen whether the activity emanating from the bottom rungs of the property ladder will be dampened.

“The Scottish housing market may appear sturdy, but there are many changes on the horizon to weather. The annual growth we’re experiencing currently is still only a third of the 16.0% pace recorded in August 2007 before the financial crisis. In June, average property prices dipped in half of all the local authority areas across Scotland, as the market attunes to calmer growth. It may be on the track, but the housing recovery still requires careful steering to navigate upcoming obstacles and to ensure that the benefits are felt equally across the country.”

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