Oil drop weighs on Aberdeen house prices

The recent drop in oil prices is weighing on Aberdeen’s housing market, with the city’s property values falling by the largest amount in Scotland in August.

According to the latest figures from the Registers of Scotland, Aberdeen’s property values fell 8.7 per cent over the year to August, taking the city’s average price to £175,922. This is in stark contrast to East Renfrewshire, which saw the biggest price rise of 12.7 per cent to £218,511.

Across the country, house prices edged up 1.3 per cent month-on-month to an average of £144,561 – 4.3 per cent higher than the previous year. This compares to a UK average of £218,964, which was an increase of 8.4 per cent over the year.

Registers of Scotland’s director of commercial services, Kenny Crawford, says: “The volume of residential sales in Scotland in June 2016 was 8,620 – a decrease of 7.4 per cent on the previous year, but up 20.9 per cent on last month.”

Crawford attributes the slowdown in sales across the year to the ongoing impact of the Land and Buildings Transaction Tax surcharge that was introduced in April, causing buy-to-let and second home buyers to bring their transactions forward to beat the deadline for the new levy.

Aberdeen’s downturn, though, has continued for longer than that.

“In the five months since the House Price Index was first published in June 2016, the City of Aberdeen has shown each month the biggest annual percentage decrease in average price of all of Scotland’s local authority areas,” adds Crawford.

Indeed, the average price in the City of Aberdeen in August was £175,922, compared to £192,744 in August last year. Average prices in the area have fallen consistently over the last 15 months when comparing monthly average price figures with the figures for the same month in the previous year.

Photo: Michimaya

 

Scottish tax receipts fall 26pc under new LBTT

26th April 2016

Scottish home sales hit a seven-year high in 2015, but transaction tax receipts fell 26 per cent.

Figures from Revenue Scotland show that Land and Building Transaction Tax revenues totalled £201 million in 2015-16, £34 million below the expected amount.

This is despite the introduction of a new levy in April 2015, as LBTT replaced stamp duty on all residential property purchases. The new rates made it more expensive to buy a home worth over £333,000, compared to the rest of England and Wales, notes Knight Frank. LBTT replaced stamp duty on all residential purchases in Scotland in April 2015. The new rates make it more expensive to purchase property with a value above £333,000 compared to the rest of England and Wales. This is especially the case in the prime market where costs are as much as 90% higher than under the previous system.

The government forecast £235 million in tax revenues in 2015-16, but the final figure was 26 per cent down on the £270 million collected by HMRC in 2014-15 under the previous stamp duty regime.

This initial bump in the road is thought to be partly fallout from the rush beat the tax deadline at the start of year, as transactions completed after the deadline naturally declined. Indeed, according to the Registers of Scotland, almost two-thirds (62 per cent) of all sales above £1 million occurred in the first three months of 2016.

However, Oliver Knight, Senior Analyst, Knight Frank Residential Research, says that the prime market may also be cooling as a result.

“While the introduction of Land and Buildings Transaction Tax (LBTT) in April 2015 resulted in a welcome reduction in purchase costs for a significant number of homebuyers in Scotland, the flipside of this was a substantial increase in taxes for those at the top end of the market,” he comments.

“Last year, we raised concerns that levying these rates for higher value homes could reduce transaction volumes and ultimately have a negative impact on tax receipts. Policymakers may need to consider allowing some room for manoeuvre on LBTT rates if they find that they continue to impact on activity at this end of the market, and if they want to hit next year’s forecast of £295 million in revenue.”

Scottish property sales exceed £16.5 billion

15th March 2016

Scottish property sales exceeded £16.5 billion in 2015, according to the Registers of Scotland.

A total of 97,701 sales took place across Scotland last year, the highest annual figure since 2008 and an increase of 4.5 per cent compared to the previous year.

Registers of Scotland’s director of commercial services, Kenny Crawford, says: “The total value of the residential property market continues to make a significant contribution to the Scottish economy. In 2015, the market totalled £16.5 billion, an increase of 8.2 per cent on the previous year. The City of Edinburgh property market represented over 17.2 per cent of this figure, bringing in over £2.8 billion to the Scottish economy. This is significantly larger than the next biggest property market, Glasgow, with 9.8 per cent of the market at £1.6 billion.”

Indeed, according to the RoS, the City of Edinburgh had the largest volume of sales, achieving 11,991 sales in 2015, up 8.3 per cent on 2014. This was closely followed by Glasgow City, up 12.2 per cent to 11,616.

Premium property registered sales in Edinburgh were also up year on year in January, according to research by estate agency Strutt & Parker.

A total of 148 premium properties (worth more than £300,000) were registered as sold in the capital in the first month of the year, up from 131 in 2015, 136 in 2014 and 109 in 2013.

The average sale price in January was £227,899, down from £236,696 in January 2015, according to Strutt & Parker, and the premium market share (the portion of all sales that were greater than £300,000) was 21.1 per cent, down from 23.9 per cent in January last year and the 40 per cent recorded in March at the height of the sales rush before the introduction of Land and Buildings Transaction Tax.

Blair Stewart, partner in Strutt & Parker’s Edinburgh office, says: “In many respects the sales market is still adjusting to the unprecedented rush of premium sales before the introduction of LBTT last year, which saw record numbers of premium sales and the average price in Edinburgh spike at £320,257.

“Looking back at 2015, the value of Scottish property sales increased 8.2 per cent on 2014 and the number of transactions was up by 4.5 per cent.”

Tougher mortgage lending conditions during the first half of 2015 impacted the recovery of Scotland’s housing market, notes research from Savills, although the market adjusted during the second half of 2015 due to a recovery in mortgage lending for house purchases across Scotland, which increased by 9 per cent from 59,500 in 2014 to 64,800 in 2015.

“LBTT aside, the Edinburgh premium market has grown steadily in recent years from the lows seen in 2009,” adds Stewart. “It has shown strength in the early months of 2016 – at Strutt & Parker we have some very exciting new properties on our books – and I am reasonably optimistic about where we are.”

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