There have been a number of stories recently about a sharp increase in residential property sales in Scotland. You can see the report from the BBC here. But this story comes with a word of caution.
The most recent crop of stories are prompted by the latest House Price Index from Acadametrics, but are based on data from the Registers of Scotland which shows sales growing from 6,011 in June to 7,281 in July. You can see month by month sales figures in the table to the right and in our Stats file here.
The data is rock solid. The Registers record every transaction in Scotland and so provide the definitive data on house sales.
So, why treat this part of the report with caution? Because it reflects market conditions last spring rather than today. That’s all down to the way the data is collected.
GSPC, like other solicitors property centres, reports sales when we are told by the selling solicitor that an offer has been accepted. That sale is only reported to the Registers of Scotland, however, when the seller moves out and the buyer moves in – the point at which ownership changes.
But there can be several weeks, even months, between the formal acceptance of an offer and the actual sale. As a result, sales recorded by the Registers in July and reported at the start of August were probably the result of offers accepted in May or even earlier.
The same time lag applies to the data on average property prices issued by the Registers. It is undoubtedly comprehensive, but it tends to report what happened some time in the past.
GSPC did, in fact, report a significant rise in sales in the first few months of this year and that has ultimately fed through in to the data from the Registers of Scotland. But that substantial rise in sales was not sustained and sales today are now broadly in line with the same time last year.
You can expect the data from registers of Scotland to reflect this in the coming months. When it does, don’t suddenly leap to the conclusion that things are getting worse. They aren’t – what is being reported has already happened.
Equally, be cautious about reports on the property market. To understand what they are really saying, you need to understand how, and when, the data was collected and analysed.