First dip in Scots house prices in eight months, despite surge in sales

The dip comes despite the strongest February for home sales north of the border since 2008, up 19 per cent year-on-year after a buy-to-let flurry, Your Move figures showed.

Hesitation was also registered at the higher end of market before upcoming elections knocks Edinburgh off the top spot.

Although, Midlothian was the only area to break a record for property values in February, surpassing pre-crisis peak.

Christine Campbell, Your Move managing director in Scotland, said: “Scottish house prices have taken a small stumble in February, with the value of a typical home falling by 1 per cent (£1,688) month-on-month. The sudden dip in prices will be a welcome reprieve for those attempting to get their foot on the property ladder, as this is first decline in Scotland’s home values seen in eight months. House prices are also down compared to the same time last year, but this tells us more about the turbulence caused by the introduction of the Land and Building Transaction Tax (LBTT) at the beginning of 2015, than anything happening in the market right now.

“In fact, another key barometer is pointing to a lot of positivity in the market. Property sales in Scotland have flouted seasonal trends to jump 10% month-on-month, representing the highest February home sales since 2008. With a flurry of buy-to-let and second-home buyers racing to avoid higher rates of LBTT after 1st April, sales in February are up 19 per cent year-on-year. This impetus also meant that purchase activity was concentrated at the lower end of the market – with aspiring landlords snapping up affordable options. We can see evidence of this in Edinburgh and Glasgow, where sales of flats – a popular investment choice – have soared in the three months to February 2016. But at the same time, there has been a slowdown at the top-end of the market due to uncertainty surrounding the upcoming Scottish Parliament election and EU referendum, particularly among foreign buyers. This imbalance between the volume of cheaper and more expensive property sales is skewing the overall measure of price growth, and tipping it downwards.

“For example, this hesitation at the prime levels of the market has hit average house prices in Edinburgh, knocking Scotland’s capital off the top spot and into second place in the ranking of areas by property value. Edinburgh’s house prices have declined 3.2 per cent month-on-month due to a drop off in high value home sales, with foreign buyers possibly delaying purchases until after the EU referendum. As Edinburgh drops back, East Lothian has sprinted into the lead, with home values shooting up 9.1 per cent (£19,548) from January. Midlothian is another bright spot in the mix this month, as the only area in Scotland where house prices set a new record. The typical home in the area is now worth £198,977, surpassing the previous peak of £198,338, established nine years earlier before the financial crash.

“While the expensive side of the market pauses for breath, uncertainty surrounding the upcoming votes provides a great opportunity for those wanting to buy their first home. With stable house prices, low interest rates and reduced levels of LBTT on cheaper properties, now is the perfect time for first time buyers to take the plunge.”