Residential

Positive picture across Scotland

Scotland’s prime market has shown phenomenal performance, with a 31% annual increase in activity in the 12 months to April 2014.  It is particularly encouraging to see the good news rippling outwards.  For example, Aberdeen is boosting the Tayside market, with 20% of Savills buyers coming from Europe's energy capital in the last 18 months.

While the market is growing in Scotland, there is no evidence of unsustainable price rises north of the border.  Growth has been underpinned by a high proportion of cash transactions and relatively low loan to value mortgage lending and, while this reduces financial risk, an increasing number of households are being prevented from home ownership. The Bank of England will therefore be cautious about imposing further constraints on mortgage lending, particularly as the impact of the recently imposed mortgage market review is unknown at this point.

In the event of a ‘No’ vote majority at the Referendum this September, we anticipate an end to uncertainty and a boost to consumer confidence with Scotland matching the UK’s mainstream residential forecasts of around 25% growth within five years.  However in the event of a ‘Yes’ vote majority we anticipate a reduction to around 10.9%.  

Positivity is being felt particularly strongly in central Edinburgh where majority of properties are being sold on the open market, although the private market also remains active.  City centre flats for professionals and downsizers are in short supply in both Edinburgh and Glasgow, often leading to competitive closing dates with bidders sometimes willing to offer substantial premiums over Home Report valuation. 

A shortage of prime residential property available in Edinburgh's core hotspots has resulted in a rise of 6% in prime values. The key, however, remains in sensible pricing to maximise interest and optimise the sale price. Interestingly there has been more local buyers this year in the Capital, suggesting improved buyer confidence and ability to buy. However both London and international buyers remain important with ‘Edinburgh’ now the most searched for location outside London on Savills website, and ‘Scotland’ close behind in third place. Buyer activity at the upper end of the market has also returned. Throughout the city centre and prime inner suburbs, good quality houses and flats are generating more sales above £1million than we have seen since 2007.  It is encouraging to see activity rippling out to the more suburban areas, where properties which represent good value continue to attract interest and offers.  

Meanwhile sales activity in Greater Glasgow has risen by 41%, with a rise of 32% in the city centre where prime prices have also risen by around 5%, slightly ahead of prices for Scotland as whole.

The market for country houses across Scotland is also picking up, due to realistic prices, with good viewing numbers and some quick offers being made. Where there is competition, premiums are making a come back.  We are pleased to be marketing Wellpark one of the best houses in Stirlingshire at £1.75 million, and our commentary on the St Andrews market made the front page of the Wall Street Journal.  It was tweeted to 5 million followers, demonstrating the enduring international appeal of that particular country location.

Market strength is returning toTayside and North East Scotland, where our offices have seen a run of sales including Turin House by Forfar at £1.186m; the contemporary Tom Beithe near Perth for £1.1m and Letterfourie in Banffshire which achieved £1.45m, after three years on the market.

With school summer holidays now upon us, and the Independence Referendum in September, activity is likely to be slower in the second half of the year.  However, underlying positivity will continue throughout the summer, the autumn, and into the first quarter of 2015.  Stamp Duty in Scotland is being replaced by the Land & Buildings Transaction Tax (LBTT) in April 2015,  with a sliding scale benefiting lower value houses, and it is likely that buyers and sellers may well race to beat its arrival.

 
 

Key contacts

Andrew Perratt

Andrew Perratt

Director
Residential

Savills Glasgow

+44 (0) 141 222 5874

+44 (0) 141 222 5874

 

Peter Lyell FRICS

Peter Lyell FRICS

Director
Edinburgh Town Sales

Savills Edinburgh

+44 (0) 131 247 3712

+44 (0) 131 247 3712

 

Jamie Macnab MRICS

Jamie Macnab MRICS

Director
Country House Sales

Savills Edinburgh

+44 (0) 131 247 3711

+44 (0) 131 247 3711

 

Ruaraidh Ogilvie

Ruaraidh Ogilvie

Director
Residential

Savills Brechin

+44 (0) 1356 628 628

+44 (0) 1356 628 628