The average house price in Scotland rose by £2,146, or 1.5%, in November on a seasonally adjusted basis, and now stands at £146,238, according to the latest Scottish house price index from LSL Property Service and Acadata.
This is the largest increase in a single month since June 2007, when prices rose by 1.7%. This surge in the average price arises from increasing demand over the last six months, which however has not been matched by a similar increase in supply – the result is strong competition for the properties which are put up for sale, Acadata said.
On an annual basis, average house prices in November 2013 have risen by £3,713, or 2.6%. This is the largest annual increase since three years ago, when annual prices in November 2010 were rising by 2.9% as the market came out of the recession caused by the credit crisis: prices had then fallen to a low point of £140,396 in April 2009.
Average house prices are now back to where they were in April 2007, pre the recession, but are still 7% below the peak price of £156,967 reached in May 2008.
Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, added: “The property market in Scotland is powering 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 that 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.
“In particular, the journey for first-time buyers is drastically better than a year ago, reinforced by Government schemes such as Help to Buy. While an enticing circle of mortgage products, low interest rates and higher LTV mortgages have propelled the market to another level, with sales volumes from June to November 2013 up by 22%. The rise in first-time buyers has been key as activity from this end of the market has reverberated higher up.
“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. While 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.”
