The latest LSL Acadata index shows prices are up by £8,890 and they are just 0.9% off the pre-crisis peak. This takes the average house price to £164,105.
However the growth is only a third of the pre-crisis rate and in half of Scotland saw prices drop in June. But home sales are also strong, up 15% in June and back on course after a springtime lull.
With the independence vote just a few weeks away, Gordon Fowlis, regional managing director of Your Move, an estate agency chain that is part of LSL, said the housing market is in good health ahead of the referendum.
‘Price growth in the last 12 months is the biggest rise we’ve experienced since September 2010. This is stronger than the annual rises in the North of England, the Midlands and Wales. While the majority of regions across England and Wales are witnessing price falls, the Scottish market is moving the other way,’ he pointed out.
In Aberdeenshire prices climbed to a new high of £228,802 last month and Fowlis pointed out that many households are feeling the weight lift off their shoulders as consumer confidence in the economic recovery mounts.
‘The housing market may have been temporarily subdued in the immediate clamour surrounding the MMR regulatory changes, but activity is again apparent, and sales rose 15% in June, up 26% on the previous year,’ he explained.
While this is widely regarded as a step in the right direction, he also pointed out that in the first six months of this year, property transactions totalled 42,200, which is just half of the volume in 2007/2008.
The data also shows that in reality, it’s a tale of two cities as a quarter of all house sales across Scotland in June were in Glasgow and Edinburgh, pushing average property prices in these cities up 4.5% and 4.2% respectively over the course of the month.
Peter Williams, housing market specialist and chairman of Acadata, said that there were substantial increases in the number of properties changing hands in both cities. Compared to May, 130 more flats were sold in Edinburgh in June and in Glasgow 60 more flats and 30 more terraces. In both cities, this increase in demand raised the average prices paid for flats, by £20,000 in Edinburgh and by £15,000 in Glasgow.
‘The market in Scotland is currently looking robust. The number of housing transactions that have taken place in each of the 11 months from August 2013 to June 2014 have been higher than the same months in the previous five years, with the first six months of 2014 seeing a 25% increase in sales over the first six months of 2013,’ he explained.
‘There were positive house price movements over the year at an average rate of 5.7% in 29 of the 32 local authority areas, some 3.9% higher than June’s CPIH of 1.8%. Hence most home owners will have a feel good factor, in the knowledge that their asset is growing at a faster rate than inflation. Average house prices are still 0.9% below the peak seen in May 2008, but the gap between the peak and current prices is continuing to narrow. It will be fascinating to observe how the next six months of 2014 play out,’ he added.
Flourishing first time buyer demand has also played a significant role to date. Overall in Scotland, sales of flats have increased the most in the first half of 2014, up 28% on the same six months of last year. However, now that the Help to Buy scheme has suspended its funding, it remains to be seen whether the activity emanating from the bottom rungs of the property ladder will be dampened.
‘The Scottish housing market may appear sturdy, but there are many changes on the horizon to weather. The annual growth we’re experiencing currently is still only a third of the 16% pace recorded in August 2007 before the financial crisis,’ said Fowlis.
‘In June, average property prices dipped in half of all the local authority areas across Scotland, as the market attunes to calmer growth. It may be on the track, but the housing recovery still requires careful steering to navigate upcoming obstacles and to ensure that the benefits are felt equally across the country,’ he added.
