The debatable usefulness of sales statistics and those politicians’ promises

WITH the number of housing announcements made by politicians over the last couple of days, pledges for tackling problems in the industry are coming thick and fast from all parties.

But while trade body Homes for Scotland welcomed the shift in focus to a concentration on the industry, they have cautioned that the only real way to tackle the housing crisis engulfing the whole of the UK is to build significantly more homes of all tenures.

Chief Executive Philip Hogg said: “We are pleased to see housing being a high profile issue in the general election with acknowledgement by the different parties that action is required.”

But he said that the point was being missed: “whether you are talking about housing for social/private rent or sale, the fundamental fact is that we need a lot more housing of all types to meet the country’s diverse needs.

“This is the only way to tackle the housing crisis which is impacting far too many of our young people and growing families.

“In Scotland, the scale of the problem is all too clear: it has been nearly two years since Audit Scotland highlighted the need for half a million new homes over the next 25 years yet less than 15,000 were built last year, representing a drop of 40% in total housing production since 2007.” As predicted by industry experts, the average selling price for properties in the first three months of 2015 in Scotland has shot up, but while such statistics look encouraging for homeowners and the wider economy, they have to be treated with caution.

House prices rose 13.3 per cent in the fourth quarter of 2014-15 compared to the same period in the previous year, according to official statistics published this week by Registers of Scotland (ROS).

The average house price in Scotland from January to March was £173,830, the highest figure recorded for any quarter since ROS began compiling quarterly statistics in 2003.

But the figures cover the period before the change in Land and Buildings Transaction Tax, which was brought in on 1 April and therefore when many buyers of high value property, keen to minimise their tax bills, would have rushed through the completion of purchasers to save money. Therefore a larger number of sales of more expensive properties in this period may well have skewed the figures.

ROS’ head of data, Hugh Welsh, said: “We’ve seen sustained growth in house prices throughout the 2014-15 financial year, with January to March’s figures representing the highest quarterly increase in average price since quarter one of 2007-08. Future sales statistics will determine whether this is a one-off spike in quarter four average prices, or whether this is a trend that will continue.”

All local authorities in Scotland showed a rise in average property prices. The highest percentage rise was in East Lothian, up 28.6 percent on the same period in the previous year to an average of £248,902.

Commenting on his member’s results, Paul Hilton, ESPC CEO, says that the new tax had been a factor but that the shift now might focus properties that are lower in value: “As predicted the percentage of new upper-mid market properties registrations has slowed this month with the change taking place on 1 April. We now expect the change to encourage the movement of more affordable properties, with all properties sold for under £333,000 now paying less tax and properties under £145,000 paying no tax all, where previously we saw this threshold at £125,000.”

He points to the incentives to buy in other areas of the market that will fuel the demand in more affordable properties: “Along with these tax savings, new government initiatives to help first time buyers and also the increased availability of pension funds, means that there is the potential for increased activity at the lower end, which produces a domino effect up the chain and makes way for a healthy state of the market going forward.”

In a market that is so clearly affected by tax changes it is difficult to see an emerging pattern. The Registers of Scotland figures also showed that the total volume of sales across Scotland was 16,946, a decrease of 4.7 per cent on the same quarter in the previous year - the second consecutive quarter that has seen sales volumes decrease, and is the highest annual decrease in sales volumes since quarter one of 2011-12. Again this might be due to the concentration on selling higher value homes rather than more lower value properties.

Next quarter’s figures may well reverse the trend, as the number of sales of higher value properties fall, because the majority have sold before April. Average selling prices may well plummet too, but again it is a false picture of what is happening to an individual home’s value.

But until the market stabilises from the changes, which could take months, it will be difficult to assess its real state of health.

The fundamental fact is that we need a lot more housing of all types