ESPC's annual review
Here’s our analysis of the property market over the last year, and what to expect in 2016.
Looking back on the property market over the last year, 2015 proved to be more buoyant than previous years since the 2008 crash, despite experiencing uncertainties due to the effects of the different government changes taking place.
The average selling price in east central Scotland increased by 5.6% in 2015, compared with 2014, although there were peaks and troughs as we saw a rocket in house prices in the first quarter, as a result of Land and Buildings Transaction Tax (LBTT).
LBTT was introduced on April 1st 2015 to replace Stamp Duty, and its effect could be seen at the start of the year when there was a large increase in the number of top-end homes being brought to market. Buyers rushed to snap up homes over £333,000 before April 1st, to avoid paying the higher tax rate for properties, resulting in average house prices increasing in the first quarter, and then dropping in the second quarter. However, this balanced out by the end of the year.
The number of homes sold in east central Scotland in 2015 rose by 9.8% annually, but growth in sales volumes has slowed down compared with the previous two years. This can partly be explained by a decrease in the numbers of properties for sale. The number of new homes brought to market in 2015 decreased by 1.7% annually, and the volume is about 40% less than the peak volumes seen pre-credit crunch.
2015 was a positive year for those selling their properties, and it was the first year since the crash that the market shifted in favour of the seller. Sellers could now put their property up for sale with more confidence that they could meet their Home Report valuation and sell it in a faster time.
The median selling time in east central Scotland in 2015 was 13.2% faster than 2014 – from 47 days down to 41 days. 57.1% of sales in 2015 met or exceeded their Home Report valuation, up 12.2% from the previous year.
68% of properties came to market as ‘Offers Over’, compared with 53% in 2014, demonstrating that sellers and their solicitors had increased confidence that properties could meet their Home Report valuation. Properties sold in 2015 that had been marketed as ‘Offers Over’ achieved an average of 6.2% over the asking price, up from 5.4% last year.
The Borders Railway opened in September, offering greater opportunities for commuting to and from Edinburgh to the Borders. We will see whether there is a greater demand for properties near to these new rail routes over the coming year.
Paul Hilton, CEO of ESPC, said: “2015 proved to be a good time for sellers as they could sell their properties quickly, but for buyers the available properties were being snapped up quickly and with greater competition at closing dates. There was uncertainty as to what effect Land and Buildings Transactions Tax would have on the housing market, and we saw a rush to sell and buy properties in the top end of the market, which drove up sales volumes and average prices in the first half of the year.
“The first eight months of LBTT raised £137 million in revenue, but this is 58% of the revenue they expected for the fiscal year. It will be interesting to see if the target is reached by April.
“For those buying, the shortage of housing for sale could continue to have an impact on prices and affect affordability for first time buyers. However, there are a number of schemes that could be of benefit, including Lift, Help to Buy 1 and 2 and the Help to Buy ISA. We also saw strong performance in the new build sector, and with more government investment in homes set to follow in 2016.
“For the year ahead, the buy-to-let market could cool on the back of new government legislation. In December’s budget the Scottish Government announced a second home tax, which could have an effect on the buy-to-let market, but we will see what effect it will have when it’s implemented in April.”