House prices drop £3,000 in April after pre-LBTT boost

  • Scottish house prices fell 1.6% in April – the largest monthly fall since 2009, after new LBTT introduced
  • Buyers rush through 83 £1m+ sales in March to beat higher tax, but no million pound homes sold in April
  • Islands weather monthly slowdown on the mainland – with Orkney, Eilean Siar and the Shetlands seeing biggest boost in values during month of April
  • April home sales up 18% month-on-month, and 4% higher than a year ago as result of stamp duty changes

Christine Campbell, Your Move managing director in Scotland, comments: “Reforming Scottish stamp duty was always going to ruffle a few feathers in the market. After a spectacular 9.4% leap during March ahead of the new Land and Buildings Transaction Tax (LBTT), average Scottish house prices subsequently fell 1.6% in April – equal to £3,000. This is the sharpest fall we’ve seen since March 2009, when the housing market was at the lowest ebb of the housing crisis. The most significant monthly downturn was found in East Lothian, where values dropped 7.2%.

“The Scottish housing market put on a high-octane performance in March, as high-end buyers raced against the clock to snap up million-pound property before the higher rates of stamp duty came into play. Overall, 83 properties worth £1m or higher were sold in March, compared to 12 in a typical month. A staggering 46 of these changed hands in the 3 days running up to the introduction of the LBTT on 1st April. This jet stream of high value purchases magnified the average price paid in March, but now the market is re-focusing under the lens of the new tax regime – and in contrast there were no property sales over £1m in the month of April.

“This high-end freeze has also cooled annual growth, which slipped from 16.3% in March to 14.6% in April. However, with double-digit growth still pervading, the housing recovery doesn’t appear too shaken, and this short-term hiccup has been concentrated in higher priced areas. The islands of Orkney, Eilean Siar and the Shetlands have weathered the stamp duty disruption on the mainland, and saw the highest price increases during the month, of 9.1%, 4.8% and 4.4% respectively. Property values also reached a new peak in the Scottish Borders, Highland, and West Dunbartonshire in April.

“There were 8,203 home sales during April, jumping 18% on the previous month, and also 4% higher than a year ago. Overall, Scottish sales in both March and April have grown on 2014 levels – bucking the trend witnessed across England and Wales, where sales have been consistently falling behind on a yearly basis over the past six months. Meanwhile in Scotland, the different stamp duty shake-up has clearly accelerated purchasing decisions to the front-end of the year. For instance, there were 237 more homes sold in Edinburgh during Q1 2015 than the first quarter of last year, of which 130 were larger, detached properties, and 96 of these changed hands in March – showing the extent of the last-minute crush before the tax deadline. This has helped property values in Edinburgh see the biggest boost year-on-year across mainland Scotland, of 25.5%.

Read the full report here.

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