The total number of sales above £1 million decreased in Scotland from 139 in 2011 to 125 in 2012. 26% of buyers came from outside Scotland, including London and overseas. This is a 9% increase from the year before.
Scottish buyers are not as prevalent in the prime market as they have
been in previous years, with just over a quarter of purchasers originating from outside Scotland.
Edinburgh, the traditional hub of the prime market with a 43% share of the market, saw a modest fall at the top end, from 62 sales in 2011 to 54 last year. The number of buyers from outside Scotland investing in Scottish million-pound-plus property grew from 11 during 2011 to 18 during 2012, illustrating the enduring attraction of the capital as a relatively safe place to invest.
Top end buyers of Edinburgh property came from a wide range of countries, including Brazil, China, Russia, and the United Arab Emirates. As ever, the Edinburgh market was also dependent upon local professionals and financiers. Home-grown, Scottish entrepreneurs and businessmen were not as visible as they have been in previous years.
Million pound plus sales in Aberdeenshire and neighbouring counties have seen a rising trend since 2009 due to its micro-climate, driven by the oil and gas industries. They increased from 21 during 2011 to 24 transactions above £1 million last year. Aberdeenshire remains well ahead of Greater Glasgow, which saw 15 transactions above £1 million last year, compared to 23 during 2011, and none within the city itself in 2012. The 15 transactions above £1 million took place in the commuter locations of Dunbartonshire, Lanarkshire and Renfrewshire, with a niche new build site at Thorntonhall generating seven sales alone.
A significant number of transactions hovered just below the million pound level in the Glasgow City area, (10 during 2012 compared to two during 2011). This suggests that the stamp duty thresholds that were introduced in April 2011 and April 2012 (an increase to 5% for buyers of £1 million properties and 7% for buyers of £2 million respectively) have suppressed the market close to these thresholds.
This also seems to be true for the Scottish country house market, which has comprised around 25% of total sales above £1 million over the past two years (34 in 2011 and 32 in 2012).These high value properties have become too expensive for younger people to buy. Most of the purchasers in this sector have been lifestyle buyers aged over 50.
Prime versus overall residential market
The overall residential market in Scotland outperformed the prime market for the first time since the housing market downturn, with a 4% improvement in the number of transactions last year, largely driven by improving bank lending conditions and the removal of stamp duty for first time buyers, up to £250,000.
However, overall annual property prices fell by 3% across Scotland by the end of 2012, according to Nationwide. We expect recovery to start in 2015/2016, as surpluses in household finances recover and confidence in the economy improves.
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