New research shows Scottish house prices buck the UK trend and continue their upward trajectory despite Brexit uncertainty.
Estate agency Savills say that:
· There has been 27 months of consecutive house price growth in Scotland;
· Edinburgh sees higher prime value growth than any other UK city, with room for more given the disparity compared to other university cities;
· An increase in both sales activity and prices at the top end of Glasgow’s housing market;
· Scotland’s million pound market recovers, with a 41% rise in transactions, boosted by Edinburgh’s south side, Glasgow city and St Andrews and the new build market;
· Country locations are attracting the interest of a growing number of UK and overseas buyers.
Scottish house prices have continued their upward trend, with transactional growth now being seen in the higher price bands.
Faisal Choudhry, head of Savills Residential Research in Scotland said: ‘Whilst London and its surrounding commuter areas have been most effected by current political and economic uncertainty, there remains more confidence in the Scottish markets, where there is capacity for further growth in values.
‘We are currently forecasting a 17% increase in Scottish house prices by 2022. This compares with 7.1% in London and 14.2% across the UK as a whole.’
According to Savills’ latest research (launched to 300 representatives of Scotland’s property sector in Glasgow today, 12 September), the number of transactions above £250,000 increased from 9094 in the first six months of the year five years ago, to a record 19,259 during the year ending June 2018. This signifies a shift in the market structure, as buyers have been able to consider relatively higher value properties, with the help of low mortgage rates and government assistance.
Consequently, the official UK House Price Index for Scotland has seen positive annual growth for the last 27 consecutive months, increasing by 5% in June 2018 compared with the same period in 2017.
It also shows the number of transactions above £1 million reached 201 during the year ending June 2018, up 41% from the 143 during the year ending June 2017. The new build market continues to play an important role, making up 32 of the total number.
Edinburgh’s dominance has grown, representing 60% of the overall total. The annual number increased from 78 during the year ending June 2017 to 120 during the year ending June 2018. More properties are selling above £1 million in Edinburgh due to the strong house price growth in recent years.
Some areas of the capital have had their strongest markets in a decade. These include the Grange, Merchiston and Morningside areas, where the number increased from just 16 during the year ending June 2017 to 40 during the year ending June 2018. This includes nine new build and the top two in Scotland as a whole.
Edinburgh witnessed 9% average annual house price growth during June 2018; the highest of any major city, according to the UK House Price Index. Over the last five years there was net in-migration of 22,575 people from overseas and 10,839 from the rest of the UK, according to official statistics, highlighting the capital’s continued popularity, which was underlined in a study commissioned by the Royal Mail earlier this year, where Edinburgh was voted the most attractive UK city in which to live and work.
The Savills Edinburgh City Prime Index grew annually by 7.5% during the second quarter of 2018 due to under supply and growing demand.
Faisal continued: ‘This was the highest rate among prime regional cities across the country and there is room for further moderate growth given the value gap compared to other university cities, coupled with relatively low supply struggling to satisfy demand.’
Whilst house prices in Edinburgh increased, a decline in sales activity below £200,000 (where a significant proportion of transactions typically take place) restricted transactional growth. Above this level, transactions increased by 9% during the year ending 2018 compared to same period last year.
Prices at a number of high profile developments in the best city centre locations continue to cross new thresholds. These include Donaldson’s and Quartermile, with prices per square foot on average at £622 and £555 respectively, with some units exceeding this.
Rising house prices have risen significantly in Glasgow, Scotland’s largest city, where there has also been an increase in sales activity across higher price bands, which has driven average price growth. This has been supplemented by the new build market, where values in the best locations have broken new thresholds. Achieving between £400 and £450 per square foot, Park Quadrant Residences and The Botanics represent two of the biggest sites in the established West End market.
Country locations are offering comparatively good value, attracting the interest of a growing number of UK and overseas buyers. One such example is Argyll & Bute which continues to attract buyers from outside Scotland who now make up 36% of prime transactions over the last 12 months.
Favourable exchange rates are adding to the appeal of Scottish property to overseas buyers. This is particularly noticeable in hotspots such as St Andrews, where seven of the 12 million pound transactions over the last year sold to international buyers.
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