Spotlight: Scotland's Prime
Residential Property Market

Scotland Prime Residential Property
Scotland's Prime Residential Property Market

22 March 2016, by Faisal Choudhry

Scotland has seen an increased demand for prime property in commuter locations

Against a backdrop of a generally improving Scottish housing market, a number of key themes are emerging.

Scotland’s prime market is expected to grow by 18.8% over the next five years in terms of values, outperforming the overall residential market and in comparison to 22.2% across Great Britain; the prime market between £400,000 and £1m continues to be constrained outside Edinburgh by LBTT (Land and Buildings Transaction Tax); after seven years of phenomenal growth, the Aberdeen market is experiencing price falls, linked to falling oil prices; while Scotland continues to attract overseas buyers, we are now seeing the return of wealthy homegrown buyers, and there were some important ‘trophy’ country house and estate sales during 2015.

 

However, one of the most important factors in the Scottish market is the fact that the recovery, which began in prime city locations, is finally established in the suburbs and is beginning to reach more outlying locations.

Our latest data reveals today’s house buyers are falling back in love with the Scottish suburbs. This may partially be explained by a dwindling supply of the best homes available to buy in the most sought-after city centre locations.

While the prime areas like the New Town, Stockbridge and Morningside in Edinburgh and the West End in Glasgow, have been enjoying a strong market over the last five years, outlying areas had been slower to recover. Over the past year, however, we have seen a jump in sales across adjacent locations, with the return of the ‘closing date’, and premium prices being paid. We expect this trend to continue and to ripple further outwards to more attainable suburbs, like Liberton in Edinburgh and Netherlee in Glasgow.

Property prices are predicted to rise across the UK as a whole this year, but commuter locations are expected to see the greatest growth, with lower fuel costs playing a part. As a result, further outlying areas including Midlothian and locations such as Helensburgh and Kilmacolm are on the upturn.

Market risks ahead of the EU Referendum may result from a drop in buyer confidence. A vote to leave the EU has the potential to offset housing market demand, as an exit is negotiated. However, the impact on values might be mitigated due to low interest rates. Whatever the outcome, there will continue to be a market due to the essential requirements to move house, together with the needs of upsizers and downsizers.

FIGURE 1

Prime and mainstream markets Five year values forecast

 
Figure 1

Source: Savills Research

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Key contacts

Faisal Choudhry

Faisal Choudhry

Director, Scottish Research
Residential Research

Savills Glasgow

+44 (0) 141 222 5880

 

Emily Dorrian

Emily Dorrian

Associate
Residential Research

Savills Glasgow

+44 (0)141 222 4132

 

Lucian Cook

Lucian Cook

Director
Residential Research

Savills Margaret Street

+44 (0) 20 7016 3837