The property market plays an important role in the Scottish economy. During 2016, the real estate sector accounted for 10.6 per cent of Scotland’s economy in terms of gross value added and grew by 1.7 per cent in real terms. That measure covers not only services that are provided by estate agents but the economic value that is added from rented and owner-occupied housing, as well as commercial property. I am happy to provide more detailed information on those sub-sectors if they are behind the member’s question.
Additionally, Scottish Government statistics show that more than £8.3 billion was spent in 2016 on the construction of new dwellings and improvements to dwellings. A well-functioning property market also contributes indirectly to economic performance, as the availability of affordable housing improves the functioning of the labour market by enabling thousands of households to take advantage of job opportunities in different parts of Scotland.
This summer, the Scottish housing market was in a serious slowdown and was reportedly stagnating in July. Government policies such as land and buildings transaction tax are stifling investment in the middle of and at the higher end of the market, which is resulting in a lack of mobility to allow people to purchase lower-priced homes. Does the cabinet secretary agree that, to improve the economy, the Government needs to fully reform its approach to taxation and taxes such as LBTT?
Questions about LBTT are really for my colleague Derek Mackay. However, Gordon Lindhurst mentioned housing statistics, and he will have seen the prosperity index, which was published recently. It said that more stable growth in house prices in Scotland than in the rest of the United Kingdom contributes to greater affordability of housing. It also said that, during the first seven months of this year, residential transactions with a value of more than £40,000 were up by an annual 5 per cent in Scotland compared with 4 per cent in Wales and 3 per cent in Northern Ireland. In England, those figures were down by 6 per cent. There is therefore some evidence of success and of the fact that LBTT advantages those who are further down the housing chain, which is good for employment, as I said.
I have one final thing to say on housing growth and how it affects the economy. I have been overwhelmed by Conservative congratulations and good wishes on the completion of the Queensferry crossing, and Conservative members will know that chambers of commerce in Fife and developers are keen to see how they can maximise the Scottish Government investment in that infrastructure project to the benefit of the housing market. I would have thought that Conservative members would welcome that.
Yes—I just repeat that Derek Mackay is responsible for LBTT.
Because of its previous devolved taxes forecasting role, and for other reasons, the Scottish Government closely monitors LBTT transactions and the revenue that they bring monthly. As has been mentioned, the position depends on conditions in the housing market and the wider economy.
As the member knows, the Scottish Fiscal Commission is independent of the Government. It is therefore a matter for the commission to determine its approach to fulfilling its remit. It published its forecast evaluation report for 2016-17 and outlined its current approach to forecasting in separate publications on Tuesday.
As I said in response to the member who asked the previous question, LBTT minimises the impact on the property market by ensuring that everyone who buys a property that costs less than £325,000 pays no tax or less tax than they would under the UK stamp duty land tax. The Scottish Government has taken up to 10,000 house purchases out of tax, which would be a tax cut in Tory language, as we have a zero per cent tax threshold of £145,000.
Those measures are meant to help the housing market in Scotland, and particularly the affordable housing market, in addition to what we are doing with social housing. The Scottish Government has a good track record.