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House prices fall in Scotland for first time in eight months

Prices are also down 2.1% year on year, taking the average price of a home to £168,020, according to the latest Your Move monthly index.

It is the first monthly fall since June 2015 and comes at the same time that homes sales registered their strongest February since 2008 with growth of 19% year on year.

It suggest that the growth in sales is down to added demand from buy to let investors ahead of the April stamp duty change and adds the hesitation at the higher end of market ahead of the  upcoming elections could be having an effect.

Edinburgh has been knocked off the top spot for price growth and Midlothian was the only area to break a record for property values in February, surpassing its pre-crisis peak.

According to Christine Campbell, Your Move managing director in Scotland, the sudden dip in prices will be a welcome reprieve for those attempting to get their foot on the property ladder.

‘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,’ she explained.
 
She pointed out that another key barometer is pointing to a lot of positivity in the market and that is that property sales in Scotland have flouted seasonal trends to jump 10% month on month.

‘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,’ said Campbell.

‘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 European Union 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,’ she added.

Campbell also pointed out that a 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.

The index shows that Edinburgh’s house prices have declined 3.2% month on month due to a drop off in high value home sales, with foreign buyers possibly delaying purchases until after the EU referendum.

Meanwhile, East Lothian has seen home values up 9.1% or £19,548 from January and in Midlothian house prices have set a new record. The typical home in the area is now worth £198,977, surpassing the previous peak of £198,338 nine years ago.

‘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,’ Campbell concluded.

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