The Scottish property market has seen a great deal of disruption over the last two years. First came uncertainty over the housing market caused by the Scottish Independence Referendum in September 2014. Unsure how prices would be affected by a potential departure from the UK, buyers and sellers wavered in their decision making.
The introduction of Land and Buildings Transaction Tax (LBTT), which replaced the old Stamp Duty Land Tax system, followed in January 2015. This led buyers to re-evaluate their finances and purchasing strategy.
This year we are seeing the impact of the second phase of LBTT, the Additional Dwellings Supplement (ADS), which levies a further 3% tax on second homes or buy-to-let properties valued over £40,000.
As a result one to two bed properties across Scotland in areas popular with tenants have seen a huge increase in demand in the first quarter. Statistics from Registers of Scotland show that in the first quarter of 2016, the number of flats sold was up 24% on the previous year. And this effect has been felt throughout the market, with the number of sales of all residential properties up 18% on average. This represents the busiest sales period since the same quarter in 2008.
Whilst many foresaw a quietening in the market following the introduction of the new ADS tax, this has not yet seemed to be the case, with indications showing no let-up in demand for sought after properties.
In the midst of these robust statistics however, the headlines tell a different story – announcing falling housing prices across the country. So how do we tell what is happening with the property market?
Firstly, it’s important to remember where we are in relation to the impact of LBTT. This new system introduced a significant increase in tax for properties at the top of the market. In order to avoid this, many of Scotland’s highest value properties were bought and sold before this kicked in, pushing average sales values up. With fewer high-end properties now changing hands, the average sale price across the board has fallen – however looking at specific areas of the market there is a very positive outlook.
And this is the danger of trying to ‘read the tea leaves’ of a property market with so many external factors buffeting it. With Brexit looming, investors and foreign buyers may yet again be reticent to place their money into a market where the future is as yet unclear.
But what does this mean for the people on the ground? The first time buyer who has scrimped and saved to pull together a deposit, the couple selling to move up the ladder to their future family home? It can be confusing and disorienting to read one day that property prices are down and the next day that demand is outstripping supply.
In such an uncertain market, it really does pay to get advice on the market from an expert. A local estate agent who really knows your market, has knowledge of historic trends, and can identify a blip in the market vs a larger move is invaluable in a changeable market.
With a decision as important as when to buy and sell, and how much for, you want to know you’re making the right choice. Statistics and figures may help to make headlines, but at the end of the day, it’s your move, and it must suit your circumstances.