House prices in Scotland reversed a six month decline in January, rising 0.7 per cent to reach an average of £141,866.
Although house prices remained 2.8 per cent lower – equivalent to £4,014 – than a year ago, the latest property tracker from LSL Property Services shows the Scottish housing market has recently interrupted six consecutive months of falling prices.
E.surv director Richard Sexton says: “The crux of the problem is weak mortgage lending. Demand for mortgages is falling, and the supply of them remains painfully tight. Personal finances have been eroded by inflation and savings are crumbling away like weathered rock. Second steppers in particular are content to sit tight and wait until the market begins to recover. And Scotland is more exposed to public sector cuts than England and Wales, which is stymieing demand in comparison to south of the border.”
Acadametrics housing market specialist and chairman Peter Williams says a rise in first-time buyer activity has slowed price declines in flats and terraced properties.
He says: “Over the year, based on a three month average, we have seen semi-detached properties decline in price by 3 per cent, and detached properties by 2 per cent, with flats and terraces losing the least in value with a decline of 1 per cent each. The smaller price falls in the terraced and flat sectors of the market are perhaps a consequence of the rise in demand by first time buyers, where activity levels have increased by 13 per cent compared to the previous year. This same sector of the market is also being targeted by the buy-to-let landlord, with the resultant competition maintaining prices at the lower end of the property ladder.”
House prices remain strongest in Edinburgh where the average cost of a home was £208,890 in January. Even in the capital – where prices are over £14,000 higher than in the second strongest market in East Renfrewshire – prices fell 0.8 per cent over the course of the year.
On an annualised basis, prices fell most sharply in West Dunbartonshire, down 12.2 per cent from £118,080 in January 2012 to £103,683.
On average, housing transactions fell 18 per cent between December and January, a result of less housing activity over the Christmas period.