New research by Savills has revealed that the Scottish property market is at its strongest level for a decade. This news comes despite worrying factors like the general election result, Brexit, higher taxes and a perpetual lack of supply. So how is this possible?
Savills claim that market activity Scotland is at its highest level since 2008, with a total of 101,421 residential transactions during the year ending June 2017. But not every sector of the market is experiencing such strong performance. The market above £750,000 has slowed as buyers and sellers continue to adjust to the government’s Land and Buildings Transaction Tax.
Currently buyers are paying £48,350 on a £750,000 residential property for a main home or £70,850 for a second home. Understandably this is putting some buyers off purchasing in this part of the market. Andrew Perratt, head of Savills residential in Scotland said, ‘the political landscape is dictating the market in some price bands, with higher rates of property tax in Scotland discouraging movement amongst local buyers and doing little to attract inward investment from further afield.’
In more positive news, the Savills report shows that the time taken for properties coming onto the market to reach a sold status has dropped to nine weeks. In Edinburgh, demand remains strong with current selling times averaging six weeks across all price bands. But many still believe that LBTT is putting the market under pressure in the capital.
Faisal Choudhry, head of residential research at Savills said, ‘ the number of sales [in Edinburgh] has fallen for the first time in six years and shortages will continue to suppress transactions going forward. We are seeing a lack of fresh prime stock on the market, as taxation bites: more people are staying for longer in their homes, rather than moving forward and being faced with unaffordable tax bills. This trend is likely to continue, unless there is a change in taxation rates.’
So, good and bad news for the Scottish property market. Overall things are looking good, but if we take a closer look at the prime property market, cracks begin to appear. If you are concerned about LBTT or want to discuss any other property matter, please do not hesitate to call us on 0131 337 1800.