East Central Scotland housing report: average selling price up two per cent

The average selling price of a house in east central Scotland increased by two per cent in 2016, compared with 5.6 per cent in 2015, according to property marketing company ESPC, which has released its annual review of 2016.

While there were concerns that Brexit would have a negative impact on housing, there was little evidence that it made a difference to the typically robust east central Scotland market, ESPC said.

It added that the property market in 2016 proved to be in favour of the seller, as a shortage of stock resulted in homes selling much faster than in previous years, and with an increase in properties achieving on or above their Home Report valuation.

There were also government changes to Land and Building Transaction Tax (LBTT) in 2015 and 2016, which had an initial effect on the housing market, including a slower growth in average selling price and an increase in the number of one and two bedroom flats being sold.

The average selling price in east central Scotland increased by two per cent in 2016, compared with 5.6 per cent in 2015. This moderate growth is partly explained by average selling prices in 2015 being driven up by higher end properties being sold before the implementation of the tax changes with LBTT.

When comparing like-for-like properties (rather than overall averages), there has been a 5.2 per cent increase in average selling prices for one bedroom flats, a 2.5 per cent increase for two bedroom flats, and a 4.5 per cent increase for three bedroom houses.

In the first three months of 2016, the average selling price of one bedroom flats in the Leith Walk area increased by 16.3 per cent, while it was one and two bedroom flats were the top sellers in east central Scotland in the first half of the year. This can be attributed to the LBTT Additional Dwelling Supplement which was implemented on 1st April 2016, as people wishing to purchase a buy-to-let property did so before this date, so they wouldn’t have to pay extra tax.

Paul Hilton, CEO of ESPC, said: “When overviewing 2016, the standout is that it was a seller’s market, with less properties on the market, rising selling prices, faster selling times and more properties for sale meeting or exceeding their home report valuation.

“While we are seeing a decrease in properties sold for the first since the recovery from the 2008 crash, this is mostly a result of the tightening of stock on the market, which some have attributed to the introduction of higher LBTT tax rates for upper middle properties. This has dampened the traditional property ladder patterns of buying up and replenishing active stock on the market.”

He added: “Possible impacts on the property market include the housing shortage, which could continue to impact on prices and active stock. There is also the potential impact of the triggering of Article 50. We will have to wait and see what the year has instore.”