Your Move has released its latest House Price Index for Scotland, which shows that Glasgow is driving the housing market north of the border.
Following a surge in April, house prices in the country slowed in May, but continued to grow above trend, at 0.6%. This takes the average house price in Scotland to £175,070, while annual growth stands at an average of 3%. This figure, however, trails behind the 4.3% recorded for England and Wales in May.
Glasgow is Driving the Housing Market in Scotland, Reports Your Move
Activity in the Scottish housing market continues to be fuelled by strong demand from first time buyers and weak supply. June’s survey from the Royal Institution of Chartered Surveyors (RICS) shows that surveyors reported an increase in enquiries in May, but stock stands at an all-time low. There was also a further decline in the number of new seller instructions.
Average house price rises are also heavily dependent on activity in Glasgow, reports the estate agent. The increase in prices in the city during May represented 60% of the total monthly rise of £1,014 seen across Scotland as a whole.
On an unsmoothed basis, house prices actually dropped in May, but the three-month average used to reduce monthly fluctuations shows a better fit with the trend recorded over the last two years, with prices rising gradually.
Your Move has yet to see the impact of the General Election result on the Scottish housing market, as activity in May will have begun well before – in many cases, prior to the election even being called.
Despite the slowdown across Scotland, just over half (17) of 32 local authority areas still saw price growth over the month, compared with 21 in March.
East Lothian recorded the greatest increase in May, at 5.4%, boosted by the sale of the second most expensive property in Scotland. East Ayrshire showed the strongest annual performance, with average growth of 13.2%. Again, this reflects the sale of a high-priced property – a home sold in Kilmarnock for £746,000, which is much higher than the area’s average price of just £125,550.
But it’s Glasgow that’s driving the market. It was one of only three areas to set a new peak average price during the month (£151,622), while prices have risen by 10.9% on May 2016.
Flats – the most popular property type in the city – have seen average prices increase from £124,000 to £127,000 in just three months. By contrast, Aberdeenshire, which is also contributing significantly, is dominated by the sale of detached homes.
The Managing Director of Your Move Scotland, Christine Campbell, comments on the latest index: “After a surge in April, Scotland has returned to its long-term pattern of modest, but fairly steady, price rises. That hides wildly different fortunes in its various areas, though, and price increases are heavily dependent on a few key areas.
“With suggestions of possible reforms to LBTT [Land and Buildings Transaction Tax] rates, it will be interesting to see how this impacts the Scottish market in coming months.”
Alan Penman, a Business Development Manager for Walker Fraser Steele – one of Scotland’s oldest firms of chartered surveyors – adds: “The strength of the market in Scotland’s biggest city is supporting continued house price growth in Scotland, but there also remains a fundamental imbalance in supply and demand. The demand from first time buyers is encouraging; we need to make sure we have the property to meet it.”