THE Scottish property market is making “solid progress on all fronts”, prompting renewed optimism for the year ahead, according to a new report.
A pick-up in house prices across the country, a swift rise in sales levels and continuing improvements in mortgage conditions are seeing the property market “power on ahead like a freight train”, the study found.
The LSL / Acadata Scotland house price index concluded the recovery is now being felt nationwide, with a surge in first-time buyers stirring up activity at the lower end of the market.
But it cautioned that many buyers remain unclear over the direction of the economy in 2014 and said the independence referendum could cause a slowdown as potential buyers delay their home purchase to await the outcome of the vote.
Nevertheless, the latest available figures, for November 2013, point to momentum in the market.
The average house price in Scotland hit £146,238 that month, up £2,146 or 1.5% on the previous month.
The increase - which also represented a rise of 2.6% compared to the same period the previous year - was the largest in a single month for more than six years.
First-time buyers driving growth
Donald MacLellan, chairman of Walker Fraser Steele Chartered Surveyors, part of LSL Property Services, said: “The property market in Scotland is powering on ahead like a freight train.
“Price rises of £2,146 in November reflect the largest increase in a single month since June 2007, when prices were up by 1.7%.
“This is down to the vast influx of first-time buyers, who have stirred up activity from the lower realms of the housing market - accelerating the rate of recovery.
“Such momentum means there’s cause for renewed optimism in 2014 as the Scottish property market shows it’s making solid progress on all fronts.
“Prices have picked up at a healthy pace across the country and sales are rising swiftly as mortgage conditions continue to improve.
“Strong demand has been pivotal in improving the outlook for the Scottish housing market as confidence has been growing exponentially in the past six months.
“With lending levels following suit, there are sure signs the Scottish property market is on the fast track to full health.
“More than three-quarters of the country saw price rises in November, showing the recovery has now become nationwide.”
Mr MacLellan said the experience for first-time buyers is much better than a year ago, reinforced by Government schemes such as Help to Buy.
There is also an “enticing circle” of mortgage products, low interest rates and higher LTV mortgages, propelling sales volumes from June to November 2013 up by 22%.
But he went on: “However, beneath the surface it’s also clear the number of homes on sale falls far short of the level needed to meet demand, which is resulting in climbing house prices.
“The blatant imbalance between the lack of housing supply and the pent-up demand needs to be tackled to allow the market to continue to recover at a sustainable rate.
“Many buyers are understandably unclear over which direction the economy will take over the coming twelve months, with some opting to sit tight in the meantime.
“The withdrawal of the Funding for Lending scheme is in part responsible for this air of uncertainty.
“Another obstacle may be the referendum this year on Scottish independence, which could cause a slowdown as potential buyers delay their home purchase in order to await the outcome.”
Prices up in most local authority areas
Regional figures for November show that monthly prices rose in 25 of Scotland’s 32 local authority areas.
Analysis of the annual change in house prices showed the highest movement on the mainland was in Aberdeen, up 11% on the year.
There, the sale of flats has experienced 35% growth over the last six months compared to 12 months earlier, resulting in prices for such properties rising by an average £27,000.
For the third successive month, average house prices in the city of Aberdeen have set a new record level at £195,740.
Acadata chairman Dr Peter Williams said the increase in the number of first-time buyers has had a knock-on effect throughout the rest of the market.
“The main driver for the increase in housing demand over the last six months has been the first-time buyer,” he said.
“The mortgage companies eased their constraints on lending to this sector of the market, offering more competitively-priced products with lower deposit requirements.
“This was assisted by the Bank of England’s Funding for Lending Scheme (FLS), latterly replaced by the Help to Buy (Scotland) scheme.”