Scottish first-time buyers bought higher-priced property than usual in the first quarter of 2012, taking advantage of the stamp duty concession, according to new figures released today by the Council of Mortgage Lenders in Scotland.
38 per cent of first-time buyers in Scotland bought property valued between £125,000 and £250,000, the bands exempt from stamp duty during the concession. This is the highest proportion since records began in 2005. Due to lower house prices in Scotland, around 35 per cent of first-time buyers usually buy property in these bands compared to 50 per cent in the UK as a whole. Properties under £125,000 were still the most popular option in Scotland in the first quarter but, at 58 per cent of first-time buyers buying within this band, this is the lowest since records began.
There were 4,000 loans, worth £380 million, taken out by first-time buyers in Scotland in the first quarter. Despite the stimulus provided by the end of the stamp duty concession, this was a 9 per cent fall in the number of loans and a 5 per cent fall in the value compared to the previous quarter, but a rise of 21 per cent by number and 31 per cent by value compared to the first quarter of 2011. First-time buyers accounted for 42 per cent of the house purchase loans in Scotland, the highest since 2001 and the same proportion in the UK as a whole.
Scottish first-time buyers typically borrowed 80 per cent of their property’s value in the first quarter of the year, the same as the UK overall. The proportion of income spent on mortgage interest payments by first-time buyers increased to 11.4 per cent in the first quarter from 11 per cent in the previous quarter but was still lower than the proportion paid by first-time buyers across the UK (12.7 per cent).
Lending to home movers followed a similar pattern to first-time buyers. The 5,500 loans taken out, worth £720 million, was a fall of 24 per cent (25 per cent by value) from the last quarter, but a rise of 8 per cent (11 per cent by value) compared to the first quarter of 2011.
Overall, Scotland experienced a fall in lending for house purchase, as in the UK, in the first quarter of 2012. 9,500 loans were taken out, worth £1.1 billion, down from 11,600, worth £1.4 billion, in the last three months of 2011, but up from 8,400, worth £930 million, in the three months to March 2011.
Remortgage lending also dropped in the first quarter in Scotland and UK-wide. There were 7,800 loans, worth £750 million, down from 9,000, worth £880 million, the previous quarter and 8,900, worth £850 million, in the first quarter of 2011.
Iain Malloch, chair of CML Scotland, commented:
“Despite the fall in lending in Scotland in the first quarter of the year, the end of the stamp duty concession clearly had an effect on the market, mainly with the increase in the proportion of higher priced properties bought by first-time buyers during this period. However, if Scotland follows the trend expected across the UK, there is likely to be a further drop in activity over the coming months.
“The CML in Scotland looks forward to working with the Scottish government and other stakeholders throughout the rest of 2012 to ensure the housing market is open for business across all tenures.”
