Tax change boosts home sales in Scotland
July 13, 2016 - Scotland
Property tax change had boosted Scottish home sales with a rise in transactions of 11% year on year but prices are down 7.8% compared to 12 months ago, the latest index shows.
The index report from estate agents Your Move suggests that prices are down due to a lack of higher value homes on the market with the average house price now £170,667.
Prices have increased in Edinburgh and Clackmannanshire but have fallen in the majority of areas throughout Scotland.
The index also shows that month on month prices are unchanged despite the new 3% surcharge on additional home sales.
‘After a year of the Land and Buildings Transaction Tax (LBTT), it’s now possible to see its impact across the Scottish housing market
. By cutting the cost of purchasing cheaper homes, LBTT has led to an 11% increase in sales over the last year,’ said Christine Campbell, Your Move managing director in Scotland.
She pointed out that with 104,344 home sales in the last 12 months, the market has outdone the previous year’s 93,601 sales. ‘These figures confirm that lower purchase taxes for property can significantly boost activity in the housing market, while also making it more affordable for first time buyers to get a foot on the ladder,’ Campbell explained.
Indeed, she believes that the Scottish Government should consider lifting the LBTT bands higher, if they want to build on the foundations of this policy, in order to support Scotland’s fragile property and construction sector.
She also pointed out that the drop in property values was caused by a spike in high value home sales last year, before the LBTT was introduced, but today’s market hasn’t regained those losses yet.
‘The facts show that since the introduction of LBTT, growth in house prices has been subdued. The average property value in Scotland has only grown 1.74% in the last six months, compared to 3.19% for England and Wales over the same period,’ Campbell explained.
‘The tax has particularly hit homes at the top of the market, as these properties have become more expensive to buy after the introduction of LBTT. So while there has been an upswing in sales, it has come at a cost for some,’ she added.
And she said that while sales in March were almost double those in February, sales in April are 66% down on the previous month. However, home sales for the first four months of the year are still well ahead on the same point in 2015, with 4,751 additional property purchases so far in 2016.
However, when you look at the local picture, the negative effects of the new surcharge are more obvious, as average house prices have dropped in 20 of Scotland’s 32 local authority areas from the previous month.
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