Property Market Update November 2017

November 2017 has been a busy month for property news, with an interest rate rise, details of a cut to Stamp Duty announced in the Chancellor’s Budget and a continued trend of demand outstripping supply. For full details, read on!

Stamp Duty Exemption Announced, But Scottish Buyers Shouldn’t Get too Excited

The Chancellor of the Exchequer announced his annual Budget on 22 November 2017. The headline for property buyers was the announcement of the immediate abolition of Stamp Duty for first time buyers of properties up to £300,000 and on the first £300,000 of the purchase price of properties up to £500,000 (again only for first time buyers). The changes apply only to buyers in England, Northern Ireland and, for a while, Wales so buyers north of the border shouldn’t get too excited unless they are planning on moving away from Scotland.

Whilst this is good news for first time buyers, the impact is most likely to be felt in the south east of England where house prices are far higher. At the moment, properties up to £125,000 in England and Wales don’t attract Stamp Duty anyway.

There has been no indication that Scotland, which has its own form of Stamp Duty (Land and Buildings Transaction Tax, or LBTT) is going to follow suit.

Interest Rates Rise

In early November 2017, the Bank of England announced that it was raising interest rates for the first time in 10 years. The ‘Base Rate’ has increased from 0.25% to 0.5%, the first rise we’ve seen since July 2007.

The rate rise is good news for savers, assuming their bank passes on the rise. For borrowers, particularly those with variable rate mortgages, the impact not likely to be hugely significant in the short term and it must be remembered that it wasn’t very long ago that interest rates were actually cut by 0.25%, this increase taking us back to 2016 levels.

Commenting on the changes, Robin Purdie, Director of MOV8 Financial, Independent Mortgage Advisers stated that: 

“It’s unlikely a 0.25% increase will make any difference at all. In Edinburgh, demand is still far outweighing supply and mortgage products being priced slightly higher is not going to impact on this any time soon.

“The flip side to this is that those saving for a deposit are not going to reach their target any quicker either, unfortunately.

“My advice to borrowers remains the same in light of the rise – make sure you can afford the mortgage at a higher rate. Yes, you may be fixed at 1.5% just now, but your rate may be higher than this when your fixed rate expires, so you need to factor this into your thinking at outset.”

For full details about the potential impact of the interest rate rise, we have written a more detailed Blog article which you can find here.

House Prices Rise

The Nationwide, the UK’s biggest building society, this month reported that house prices across the UK rose by 2.5% in the year to the end of November.

The figure is based on the lender’s own data and not all transactions across the UK and represents a 0.1% increase in November compared with October. The average UK home, according to Nationwide, is now valued at £209,988.

The Nationwide reported that a lack of supply has maintained house price growth in recent times.

Meanwhile in Scotland, the ESPC reported that the average selling price in east central Scotland between August and October 2017 increased by 6.1%, to £233,748, when compared with the same period in 2016. The number of homes sold increased by 3.3% when compared with 2016, however the number of new properties coming to the market in the same period increased by only 0.7%.

With the increase in the number of sales continuing to outstrip the increase in the number of properties coming to the market, the ongoing shortage of supply versus demand is liable to continue this trend until seller confidence matches buyer confidence.

At MOV8, the number of sales that we have registered in November versus the number of new properties coming to the market also shows a trend of supply being outshone by buyer demand. In the period for November to date, we have seen 91 sales versus 79 properties coming to the market in the east of Scotland area.

What the numbers do also show is that buyer demand does not dry up in Winter, quite the opposite. The Winter months are a time when the proportion of properties selling increases in relation to other times of the year. In short, if you are thinking of selling your home or investment property and are happy to conduct viewings with a Christmas tree in your living room, there remains huge buyer demand and, when demand outstrips supply, it has a very positive effect on house prices. For more information about why Winter is such a great time to sell, have a look at last month’s Blog article here.

We’re Here to Help

If you are thinking of selling your home or investment property in 2017, please do get in touch with us by calling 0345 646 0208 (Option 1) or by emailing [email protected] to organise a free valuation of your home or to get a full, transparent breakdown of the costs of selling your home.

You can also now instantly book a free valuation appointment, online, by following this link.


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