End of summer bounce for Scottish house prices

House prices in Scotland increased in September in an end of summer bounce, according to the LSL/Acadametrics House Price Index.

The latest data shows a rise of 0.8 per cent, marking the third monthly price increase in a row.

Interest rates are historically low in Scotland and this, coupled with lenders introducing competitive products, has made homes extremely affordable. But as buy to let investment increases, property prices are being driven up.

Gordon Fowlis, Regional Managing Director of Your Move, explains: "Historically more people move home over the summer, and that pushes up prices. This year, that trend has lasted longer than normal, with the market making up for lost time after a turgid spring, and more buyers looking to take advantage of cheap mortgage rates introduced over the summer.

"But, to a very significant extent, the market is still being propped up by wealthier buyers who are being able to take advantage of exceptionally low mortgage rates. Sadly for lower income buyers, lenders have very strict criteria attached to these mortgages which means they can't hope to get approval for them.

"This suppressed level of activity at the lowest end of the property ladder means we expect prices at the end of the year to be lower than in 2010. For every first time buyer, three buyers are created further up the market. Gridlock at the lowest end of the market resonates all the way up the chain, and prices won't resuscitate to their pre-2008 levels until more first time buyers can access mortgage finance."

Year on year, the overall house price decline slowed from 1.9 per cent to 1.5 per cent, while property transactions in September also declined as autumn sets in.

Dr Peter Williams, housing market specialist, comments: "Traditionally, prices in Scotland fall by some -1.3% from August to September, due to seasonal factors. Prices have fallen by less than would otherwise have been anticipated for this time of the year, indicating a late summer bounce in prices above the norm."

Fowlis concludes: "The market is showing commendable resilience to the economic turmoil surrounding it."

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