Slowdown in house prices rise as number of new instructions falls

Price rises in the Scottish housing market have slowed down and the number of new instructions has fallen, according to property surveyors.

The latest RICS UK residential market survey revealed a mixed picture for Scotland as house prices continued to rise last month, but at a slower rate than the previous quarter.

At the same time, there was little encouragement for sales activity, with the number of new instructions falling.

Respondents said a lack of available properties, political uncertainty and the effect of land and building transaction tax (LBTT) bands had all contributed to the slowdown in the market.

Across the UK, 44% identified domestic political uncertainty as the biggest factor explaining the current state of the market compared with 27% who highlighted Brexit as the most important factor influencing the picture.

Gail Hunter, RICS regional director for Scotland, said: "This is a mixed picture for the Scottish residential market, with a slowdown in price rises and a fall in new instructions.

"However, one consistent message is that the lack of available housing stock is putting pressure on the market by driving up costs and pricing prospective buyers out of the market.

"More must be done to free up housing stock to ease this inflationary pressure and stimulate housing instructions and sales."

A post-election bounceback had been predicted in residential property transactions but Hew Edgar, RICS policy manager in Scotland, said this had been patchy due to supply-led price pressures and issues in certain sections of the market created by the bandings in LBTT.

He added: "The issues being reported due to the current LBTT bandings must be addressed to tackle the bottleneck being created by those who are put off moving property and are, instead, adopting the 'improve, don't move' mentality.

"We urge the Scottish Government to review the LBTT framework and devise a banding and threshold structure that would improve market fluidity, and address the current uncertainty which is stymying property transactions and depressing house-buying activity."