Whilst Britain’s prime property market attempts to move forward with Brexit negotiations, one hot spot for prime property sales has been Scotland. The level of growth is at its highest level since 2008 with 101,421 residential transactions as of June 2017.
Price brackets ranging between £400,000 and £750,000 have seen annual transactions growth by almost 8% according to a recent analysis by Savills. The majority of market sales activity can be found at the £400,000 price range. The Scottish market seems to be benefitting from low mortgage rates, lower tax rates and the initiatives provided by the Government in the Help to Buy program. One concern for the £750,000 and above prime market sector has been the Land and Buildings Transaction Tax (LBTT) which may be why there has been slight decrease in sales.
The Savills analysis also states that:
‘Scotland’s improved market performance is due in part to the resilience of Scottish buyers who have become used to political change, combined with a return of buyers from outside Scotland, who are attracted by the value gap and the reduced momentum with regards to the Scottish Independence debate.’
Prime Market Performance: Glasgow
The greater Glasgow prime property market has recorded its highest level of transactions in the £400,000 and above range in five years. Transactions for the year ending in June 2017 were 1,012 a 29% increase than at the same time in June 2016.
Growth in Greater Glasgow prime property saw a 40% increase in new build transactions which now makes up 30% of all of the markets activity. One area of the prime market that has seen a rebound is the second hand market.
For prime property at £750,000 and above there were 86 property transactions this year ending in June 2017 outpacing last year’s rate of 61 transactions and 69 before the LBTT went into effect.
The most popular locations for prime market buyers are Glasgow’s West End and Park where almost half of the prime sales activity for the city can be found. An increase of almost 48% for prime market sales is in the commuter location Lanarkshire with new builds available in Hamilton, Bothwell and Thorntonhall.
Activity for the prime value range of £400,000 and above accounting for 12% of area transactions can be found in the suburban locations of Bearsden, Giffnock, Newton Mearns, Lenzie and Milngavie.
Transactions of £400,000 and above for Edinburgh’s prime property market rose to a five year high in the central city hotspots of Grange, Morningside, Merchiston, Inverleith and Stockbridge.
Property in the value range of £1 million can be found in the West End, Ravelston, Murrayfield and Trinity. The prime location of New Town has seen its £1 million and below price range performance remain the same as last year’s sales activity. For transactions in the £1 million and above sector the first half of 2017 has five recorded transactions compared to 13 at the same time in 2016.
Housing activity for Barnton and Cramond is at its highest level in five years as a result of new build activity. Whereas a reduction in new build activity for Colinton led to a decrease in prime transactions. The second hand market in Colinton, particularly above £1 million, has seen a mild recovery.
One problem for the local new and second hand prime sector has been a lack of available prime properties as a result of the LBTT. This has resulted in 11% fewer properties to be available on the market for the £400,000 and above compared to the same time in 2016. Savills states that as a result of LBTT that a trend for people staying longer in their homes instead of moving and this trend will last for a while.
The city seeing its prime property market transactions increase since the second quarter of 2014 is Aberdeen City and Aberdeenshire with 2,254 property sales in the second quarter of 2017, a 7% increase compared to 2016.
The highest transactions were in the price band of up to £500,000 with a 14% increase of sales while residential property at £500,000 and above saw sales decrease by 20%.
For Aberdeen Savills reports:
‘This reflects the lack of realistically priced fresh properties being launched onto the market at this level. There is strong demand for appropriately priced properties between £500,000 and £1,000,000, with current selling times averaging six weeks, compared to 14 weeks across all price bands in Aberdeen.’
In the neighbouring areas of Aberdeen including the counties of Angus, Dundee City and Moray transaction activity reached record highs but prime price valuations are 17% lower since 2008. Most of the transactions have been at the £500,000 levels. Dundee City has recorded 31 prime transactions above the £400,000 in 2017, the highest in five years.
Mainstream average house prices have reached record highs in 2017, however prime values are still 17% lower than the peak of 2008. Transactional growth has been modest and mostly took place up to £500,000. Above this level, the implications of LBTT are having an effect.
For the overall prime property market for Scotland the impact of LBTT is having the most impact on prime transactions of £750,000 and above with the result of residential sales decreasing by 7% since June, 2014. Properties of £1 million and above which had seen some adjustment to the LBTT are now seeing a decrease in transaction activity.
In its analysis Savills says:
‘The Scottish Government has set itself ambitious LBTT residential targets, ranging from £310 million in 2018/2019 to £362 million in 2021/2022. Such levels are unlikely to be achieved unless there is a change in rates that can stimulate the lucrative prime property market above £750,000 and also maximise revenue from the wider market.’
By Kevin Murphy: www.kevinmurphy.london