Scottish house sales ‘shows confidence returning’

First-time buyers account for the majority of the 21 per cent increase recorded in July from a year ago, according to LSL Property Services/Acadametrics.

Registers of Scotland recorded 8,833 property transactions during the month, an increase of 1,873 or 27 per cent on June, the LSL report said.

The housing market also saw a small rise in prices, up 0.3 per cent in July compared with a year ago. The first price increase in four months brought the average cost of a house to £143,574 compared with £145,110 in July last year.

Alan Penman, director of chartered surveyors Walker Fraser Steele, who are part of LSL, said it could be the start of a prolonged period of price increases.

“Sales have been increasing and confidence is gradually seeping back into the market,” he said. “First-time buyer lending in Scotland was at its highest since 2008 in the second quarter of the year, which has driven sales up to their highest level in five years. The improvement is down to a significant increase in the availability of high loan-to-value mortgages. Banks are more willing to extend an olive branch to borrowers with small deposits, which has opened the door to thousands of buyers who were previously locked out of the housing market.

“The improvement looks as though it should be long-lived. Further growth in the market is expected as new buyers are keen to enter the market and potential sellers will start to put their homes up for sale to benefit from rising prices.”

July saw the highest number of sales in a single month since July 2008, when 10,124 were recorded, said the survey.

Before the onset of the economic crisis in 2007-8, an average 13,000 properties were sold in Scotland in July. Orkney, East Renfrewshire and West Dunbartonshire saw the biggest rise in sales, while Angus and the Borders saw fewer transactions.

Peter Williams, housing market specialist and chairman of analysts Acadametrics, said: “Ordinarily we would expect the market to experience an increase of 7 per cent in the number of homes sold in July compared to June, so the increase of 27 per cent this year is exceptional.

“Clearly, momentum has been building, both within the economy and the housing market. Though real wages have not risen, low interest rates, tax benefits, more mortgage availability and competitive product pricing have encouraged more activity.”

But the UK market was still patchy and while house prices were up by 3.7 per cent year-on-year in England, in Scotland they dropped by 2 per cent and by 0.7 per cent in Wales.

Prices in Northern Ireland were up by 1.8 per cent year-on-year as the market showed signs of starting a slow recovery after some sharp falls following the economic downturn.

The annual pace of house price inflation picked up across the UK in July to its fastest rate recorded in 2013 so far at 3.3 per cent, taking values to £245,000 on average. Prices rose by 0.3 per cent month-on-month.

Concerns have mounted in recent weeks that government initiatives to kickstart the housing market, such as Funding for lending and Help to Buy, are in danger of creating a property bubble, with borrowers over-stretching themselves as access to low-deposit deals returns.

Matthew Pointon, property economist at consultancy Capital Economics, described London, where prices have risen by nearly 10 per cent, as a “special case”, with prime central London in particular seen as a safe haven for overseas buyers to place their cash.