LSL Scotland HPI: Home sales recover in September, but prices fall

The latest House Price Index from LSL Property Services has shown that average Scottish house prices fell 0.4% or £587 over the month, slowing annual change to just 5.1%.

Related topics:  Mortgages
Rozi Jones
19th November 2014
Scotland Houses

In September, house prices in Scotland fell on a seasonally adjusted basis by £587, or 0.4%, to £163,630, the second month in succession that prices have fallen, after a run of eleven months of price rises.

The fall in prices goes against the trend seen in England & Wales, where all regions saw prices increase in September, except for the North and East Anglia, where prices fell by 0.2% and 0.1% respectively. However, all regions in England & Wales saw a decline in the rate of growth of house prices during the month, with the exception of the North West.

In Greater London in September there was a noticeable trend that prices in the most expensive parts of the capital, the prime central locations, were starting to decline, with five of the top six most expensive boroughs seeing price falls in the month. In Scotland, only two of the top six local authority areas saw a decline in prices in the month, although this did include Edinburgh where prices fell by 1.3%, mirroring the pattern in central London.

On an annual basis, house prices have increased by £7,960 or 5.1%, which is 0.7% lower than last month.

Annually, prices have risen by an average 8.7% in the top quartile of local authority areas ranked by price. This contrasts with an average 1.4% price increase for the lowest quartile of local authority areas ranked by price. It therefore suggests that rising house prices are associated with higher priced properties – a trend that is also observable in England & Wales, except in Greater London. The lower priced boroughs are seeing strong price growth, but in the higher priced boroughs, prices are starting to wane.

During September, the number of housing transactions was higher than anticipated, making up for the lower than expected figures in August, which were a consequence of uncertainties in the market arising from the independence referendum. Overall, Q3 2014 saw a 9% increase in sales compared to Q3 2013. The Q3 figure does however show a slowing in the expansion of sales from earlier in the year, when during both Q1 and Q2 2014, sales were running 22% above the equivalent quarter in 2013.

Christine Campbell, regional managing director of Your Move, comments:

“Following almost a year of fair winds and steadfast price rises, this is the second month in succession to muddy the waters, with average property values in Scotland falling a further 0.4% in September. Two of the most expensive areas of the country saw the tide turn, with prices in Edinburgh dropping 1.3% during September, and Aberdeenshire seeing a slump of 1.2% over the month – reflecting the ripples in evidence in prime central areas of London, as the top tier of the housing market experiences the keenest downturn.

“While Scottish house prices have sailed up nearly £8,000 in the last twelve months overall, the rate of annual growth appears to have changed tack, easing back to 5.1% in September from 5.8% in August. Since June, the monthly pace of house price growth has ebbed away, as doubt raged over the future of Scotland within the United Kingdom, and touched the brakes on activity in the housing market.

“However, these shifts we’re seeing on the surface haven’t uprooted the solid foundations of the recovery, with average house prices across 81% of Scotland standing taller than a year previously. East Renfrewshire towers ahead in terms of annual price growth, with property values soaring 13.4% in the year to September 2014, and new price peaks were reached in East Lothian and Aberdeen City, as activity continues to build. The price of a detached home in Aberdeen City has risen by an average £15,000 over the last three months, to total £410,000.

“September also saw sales snap back after the vote put the lid on uncertainty, and transactions were up 15% year-on-year, compared to only 7% growth over the twelve months to August. After the ground that was lost in August, renewed demand saw more vigorous activity buck the usual seasonal pattern, and this was the strongest September for house sales in seven years.”

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