Prime Residential Property - the recovery continues

The market has reached a turning point.

There is no doubt that the market faces some significant economic and political challenges over the next few years, including the uncertainty surrounding the independence referendum next year and proposed changes to stamp duty the following year.  But, in our opinion, the prime market in Scotland is at a turning point, boosted by improved mortgage lending across the whole of the market, and an improvement in general confidence. 

There is some evidence of market strength beginning to spill out to regional locations. The number of prime sales has increased across Scotland this year, fuelled by the strong market in Aberdeenshire and improving markets in Edinburgh and Glasgow.  Prime transactions across Scotland increased by 6% in the first half of this year, compared with the first half of 2012.  

Country markets lagging

Whilst values in key prime areas such as Edinburgh’s New Town and Glasgow’s West End gently improved this year, Scotland’s prime provincial locations lagged behind. This is due to the fact the over supply of unsold houses has largely been corrected in core areas, but this is yet to happen in some of the prime regional areas of Scotland. 

The increase in the number of sales has been matched by a rise in the number of homes coming onto the market.  As a result there continues to be a record number of prime country homes available to buy.  Buyers have had a lot of choice and prices have fallen by a further 2% as sellers have been forced to accept lower offers.

However the Edinburgh Country House department has had an encouraging autumn with our share of successes, including an Open House at The Blue House on the beach in Elie (asking price £675,000) with 16 viewings generated and a competitive closing date.  Savills continues to have a dominant share of the top end of the market in St Andrews and secured four £1m plus sales in the town this year – including the sale of Northcliffe on The Scores at offers over £2.75 million.   East Lothian continues to be the most sought after location for the country house team.  Notable sales include Rucklaw (£1.75 million) and Stamford Hall in Gullane (£1.7 million). The competitive closing date for Sherratts House in Aberlady (asking price offers over £600,000) demonstrates the strength of the market at this price level.

Still slow at the top end

The top end of the market in Scotland, suppressed by a lack of home-grown buyers, remains difficult with increasing reliance on purchasers from outside Scotland. There were 46 residential sales recorded at £1 million and above during the first six months of 2013 in Scotland. This is only one less than for the same six-month period last year but 26% less than the average from 2004 to 2013.  The bulk of these sales have been in Edinburgh with 25 registered sales during the first six months of this year.  Across Scotland, there were only two transactions above £2 million during this period compared to seven last year.

We expect that transaction levels will continue to improve but that values will not fully recover until demand and supply eventually rebalance.

Aberdeen strength spills out

According to Savills latest research, not only does the Aberdeen area continue to prosper and buck the UK trend, there is evidence of local market strength spilling out to the rest of the country. Local buyers are not only investing in the Aberdeen area but are now actively seeking homes in London, other second home locations, as well as accommodation for their children in university locations both sides of the border. The number of Aberdeen buyers, registering with Savills to purchase in other UK locations has increased by 76% this year.

 
 

Key contacts

Andrew Perratt

Andrew Perratt

Director
Residential

Savills Glasgow

+44 (0) 141 222 5874

+44 (0) 141 222 5874

 

Jamie Macnab MRICS

Jamie Macnab MRICS

Director
Country House Sales

Savills Edinburgh

+44 (0) 131 247 3711

+44 (0) 131 247 3711

 

Peter Lyell FRICS

Peter Lyell FRICS

Director
Edinburgh Town Sales

Savills Edinburgh

+44 (0) 131 247 3712

+44 (0) 131 247 3712

 

Ruaraidh Ogilvie

Ruaraidh Ogilvie

Director
Residential

Savills Brechin

+44 (0) 1356 628 628

+44 (0) 1356 628 628