Year on year prices have climbed 4.3%, or £6,750, to an average price of £162,302, the LSL Property Services/Acadata index also shows.
It points out that May marks longest period of sustained monthly price growth since before the economic crisis and the property market recovery has strengthened across the country, with a new price record being set in Aberdeenshire.
‘We are now seeing the longest sustained period of price growth in seven years. Prices have not climbed so steadily every month since December 2007,’ said Donald MacLellan, chairman of Walker Fraser Steele Chartered Surveyors, part of LSL Property Services.
‘Not only this, but growth has put down roots across the country, with 87% of the local authority areas in Scotland enjoying annual average house price rises. In May a new record house price was reached in Aberdeenshire, taking the cost of an average home to £224,803,’ he explained.
He pointed out that first time buyers provide a solid foundation for the recovery to continue building on.’ In the three months to May 2014, the number of flats sold rose 26% on the same period last year, followed by terraced houses with a 22% annual increase in sales. As the typical property choices for first time buyers, this illustrates the stream of activity at the entry level of the market powering growth and consumer confidence,’ said MacLellan.
He also said that the 3% fall in sales goes against the historic seasonal trend for this time of year, suggesting that tighter regulations under the Mortgage Market Review have temporarily slowed housing transactions.
‘But with recurrent indications that interest rates will rise before the year is out, new record property prices being set, and only three months to go before the independence referendum, potential buyers may also be taking heed of caution and delaying purchase decisions until they can be clear what the future holds,’ he commented.
‘Whether this monthly blip is symptomatic of a broader turning tide in the housing market remains to be seen, as it is still too early to see. More changes are afoot, with greater stress testing and loan to income caps coming into play to ensure the long term health of the property market,’ he said.
He also pointed out that the Bank of England or the UK government intervening further in the property market to rein in housing demand is not necessary in many parts of the UK, and could pull the rug out from under the feet of recovery in areas where growth is still bedding down.
Prices are not rising everywhere. In the city of Glasgow house prices dropped 3.1% in the month to May 2014. ‘The Help to Buy scheme and further investment into new housing developments are a lifeline in areas such as these to consolidate growth,’ added MacLellan.
