The property market in Scotland has undoubtedly faced many challenges during the course of 2014. The start of the year was dominated by the implementation of the Mortgage Market Review (MMR), which saw the tightening of lending and affordability criteria. There was considerable concern its introduction would disrupt the market, however, the mortgage sector has clearly demonstrated its capacity to adapt and there has been a significant easing of market conditions.
The latter part of the year witnessed a period of house price stagnation, as a result of uncertainty surrounding the Scottish independence referendum. With the referendum now firmly over, house prices in Scotland are now showing signs of recovery. Scottish property prices increased by 0.7% in October, which saw the average house price now rise to £164,798. Notable month on month price increases were evident in East Dunbartonshire, which rose by 5.8% and a 3.4% rise in Fife*.
This news demonstrates great signs of optimism and confidence that the market is recuperating as it is showing strong signs of growth. Overall, Scottish property sales in the period up to October 2014, were 14% higher in comparison to the same ten months in 2013. Latest figures from the Council of Mortgage Lenders (CML) indicate home lending in Scotland continues to be driven crucially by lending for house purchases. In the third quarter of 2014, there were a total of 7,500 first time buyer loans in Scotland, a 15% increase compared to the same period in 2013. Furthermore, mortgage lending is expected to grow in 2015 and 2016. These are extremely encouraging signs for home movers and first time buyers alike.
Homeowners, first time buyers and those looking to remortgage still have an excellent opportunity to benefit from considerably cheap mortgage deals. Notably, fixed rate mortgages are looking particularly attractive, and may get cheaper still. The market has witnessed a string of rate cuts as lenders endeavour to offer more attractive product ranges. The introduction of stricter mortgage lending criteria, resulted in a slowdown in lending activity. As we go into 2015, it’s important to be wary of a possible interest rate rise predicted for the latter part of the year, and with this in mind, it couldn’t be a better time to capitalise on mortgage deals currently on offer.
From April next year, the new Land and Buildings Transaction Tax (LBTT) is set to replace Stamp Duty, resulting from greater devolved tax raising powers for Scotland. Such legislation will have an impact on the taxation systems for residential and non-residential properties, where it’s expected the market will have a short-term cooling off period, until it adjusts to the impacts of LBTT. It’s a welcomed move intended to help first time buyers onto the property market where no tax will be paid on their first £145,000 of their house purchase. Additionally, it’s anticipated there’ll be a flurry of transactions in the first quarter of 2015, before the new regulations come into effect for those individuals who would be penalised.
There’s no doubt the housing market in Scotland has remained robust during the last six months, despite the mortgage market review rules introduced earlier in the year. The substantial increase in first time buyers indicates buoyant times and is a strong factor in Scotland’s economic recovery.