House prices in Scotland rose by 4.2% in December 2014, with property values almost returning to pre-recession levels.
The average price of a property in Scotland rose to near 2008 levels with the average price sitting at £165,075 according to the House Price Index. The rise in property prices coincided with a rise in the total number of homes sold, with an 11% rise in 2014.
The market “boom” and increase in sales was led by first time buyers, with a 15% increase in loans for first time buyers wishing to buy a property in the last year.
Scottish Values
Whilst the value of properties rose across Scotland, some areas had a remarkable growth. Shetland had the highest growth with a 17.1% rise on the previous month and 19.1% on the previous year. Despite the uncertainty over the future of oil prices, Aberdeen’s market grew by 10% with one property selling for £3 million. The Western Isles and North Ayrshire also saw remarkable increases with the market booming by over 8%.
Christine Campbell, regional managing director of Your Move, said: "Scottish house prices reached a crescendo at the end of 2014, ending on a high note with an all-time record December.
"After the brief unsteadying influence of the independence referendum, house price growth has firmly fallen back into a steady rhythm and values climbed 0.3% in December.”
2014 improved throughout the year with 8500 transactions a month in the last five months of the year, an amount higher than the same five months in any of the six preceding years.
The report from the House Price Indicates points to the changing stamp duty in Scotland, with stamp duty to be replaced by the land and building transaction tax (LBTT).
Land and Building Transaction Tax
Under new tax rules, which come into place on April 1st, there will be a small saving on properties costing between £125,000-£250,000. On properties costing more than £254,000, which is roughly 14% of the home sales market, buyers will be forced to pay a higher tax than the current level.
It is this impending reform that many have deemed responsible for the surge in Scotland’s property market.
John Tindale, senior housing analyst for Acadata, said: "We anticipate that there will be a steady increase in the number of purchases of properties in excess of £254,000 prior to April 1, 2015 as buyers seek to avoid paying the additional tax.
"We also expect to see the average price of housing rise, somewhat artificially, over the next few months and especially in March 2015, when there will undoubtedly be a rush of higher-priced sales just prior to the tax change-over date."
Prime Real Estate
According to research from upmarket sellers, the number of upmarket homes being sold in Scotland rose by 88% between the second quarter and the fourth quarter of 2014, with prime market areas, such as Edinburgh, reporting a 47% increase in property sales in some areas.
Buyers will spend £35,000 more on homes costing over £1 million under the new tax reforms.
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