Demand still high
Tax hike hitting property sales, says ESPC
Between August and October sales volumes have decreased by 14.9% compared to the same period last year, says ESPC.
This reveals a continued slow down over recent months, with an 8.1% decrease in sold properties in the August house report and a 10.7% decrease in the September house price report.
The decline in sales is linked with a continued decrease in the number of properties coming to market.
Over the last three month period, 9.2% fewer properties have been registered for sale, compared with the same period last year.
This could be attributed to the supplementary 3% tax on second homes introduced in April this year, which may be stalling the market, says ESPC.
Sellers who wish to buy a property before selling their existing property face paying this tax, and this adds an extra expense to be considered.
Demand for properties remains, which is shown by a rise in the average increase in selling prices, particularly for two bedroom flats in Morningside and Merchiston, up by almost 19%, and for three bedroom flats in Currie and Balerno, up by 18.6% year on year.
The latest Citylets report has shown that rents are also increasing over the last three months when compared to the same period last year.
One bedroom flats in Edinburgh are up by 9.6% and two bedroom flats are up by 7.2% year on year. As landlords purchasing new buy-to-lets must now face the 3% supplement, it is likely that this will be compounded onto rent. It also demonstrates that demand remains in Edinburgh’s rental market.
ESPC business analyst Maria Botha-Lopez says: “We have seen over the last three months that there is a more pronounced shortage of homes, and anecdotal feedback from solicitor estate agents is pointing to the 3% LBTT Additional Dwelling Supplement as potentially stifling the market.
“As supply continues to drop, it creates a greater demand on the properties coming to market. Average selling prices continue to rise, with a 5% increase in prices across east central Scotland.
“All the indicators of a seller’s market are still in place, and hopefully the traditional seasonal upturn in properties coming to market after the holidays will provide suitable options for would-be sellers to continue their journey along the property ladder.”
The number of homes sold in east central Scotland between August and October of 2016 decreased by 14.9% annually.
The average selling price in east central Scotland between August and October of this year has increased by 5% when compared with the same period last year.
The percentage of sales achieving or exceeding their Home Report valuation rose from 58.9% between August and October of 2015 to 66.7% in 2016. In Edinburgh, 73.3% of sales met or exceeded their home report valuation in the current reporting period.
The median selling time in east central Scotland is 31.3% faster when compared to the same three-month period a year ago – from 37 days down to 25 days.
82.5% of properties listed between August and October 2016 were marketed as ‘offers over’, compared with 69.3% in 2015.