The run-up to the General Election and the planned switch to Land and Building Transaction Tax (LBTT) have been conflicting factors influencing the prime Scottish country house market so far this year. Oliver Knight analyses the latest figures.
Prime country house prices in Scotland rose by 0.2% between January and March, a slightly more modest increase than the 1% growth seen in the final quarter of 2014.Annual growth also slowed to 1.2%, compared to average growth of 2.1% in 2014.
More moderate price growth at the top end of the market can be attributed to buyers and sellers adopting a more cautious approach in the immediate run up to the General Election.
However, in spite of the slowdown in price growth, prime sales volumes in the first quarter of 2015 increased as both buyers and vendors looked to complete deals ahead of the switch to Land and Building Transaction Tax (LBTT) in April.
Knight Frank sales data shows the number of prime country homes changing hands between January and March, ahead of the implementation of the new levy, was 11% higher than during the first three months of 2014.
LBTT replaced stamp duty on home purchases in Scotland. Under the new rules, 50% of buyers will not be liable to pay any tax on the purchase of a home. However, for homes valued above £330,000 the up-front cost of moving will increase.
The introduction of LBTT is likely to have a knock-on impact on sales at the top end of the market in the second quarter of the year.
Ran Morgan, Head of Scottish Residential Sales, commented:
“In spite of higher levels of property tax, Scottish property continues to offer good value, especially when compared with London and southern England.
“Over the last year 57% of our buyers were from outside of Scotland, highlighting the global appeal of the country. This trend has continued in 2015, with individuals from Hong Kong, the UAE and London all purchasing properties during the first three months of the year.”
Average prime Scottish country house prices remain 22% below the market peak in Q4 2007. This means a property valued at £1m in 2007 would now be worth £780k in Scotland. Edinburgh led from the front with a year-on-year price rise of 4.1%, followed by Central and Northern Scotland. Prices in the South East remained unchanged from Q1 2014.