The prime second hand residential market at £400,000 and above across Scotland showed strong performance last year, with a 19% annual increase in activity, reaching 2,456 transactions in the 12-month period between December 2012 and November 2013.

The market is being boosted by the hubs of Edinburgh, Greater Glasgow and the Aberdeen area, supported by the strong local economy. Prime transactions in the Aberdeen area increased annually by 33%. The market strength in these core locations is spilling out to provincial locations, such as Fife and Tayside where prime transactions increased annually by 18% and 16% respectively. The prime markets in Ayrshire and Borders also improved following restrained performance during 2012.

Rise in prime values

Prime values across Scotland have remained subdued over the last few years due to the high levels of stock available on the market. However, supply in some hotspots in Edinburgh and Glasgow has been falling, resulting in a gentle rise in prices. The rebalancing of supply and demand has started in the country locations of Scotland, with prices during the last quarter of 2013 beginning to stabilise. We expect a gentle rise in Scottish prime values during 2014 when supply and demand eventually rebalance.

Recovery in £1 million market

There are signs of gentle recovery at the top end of the market above £1 million, with 134 sales recorded between December 2012 and November 2013, compared to 125 during the previous 12-month period. However, the current level of 134 transactions is 12% below the 10-year annual average of 152 transactions.

The million pound market in Scotland has been affected by a falling number of home-grown buyers. On the other hand, the number of purchasers from outside Scotland is approaching its highest level since the peak of the market in 2007, with 39 sales recorded to buyers from outside Scotland last year, compared to 41 in 2007.

Edinburgh, the traditional hub of the prime market with a 47% share of this market, saw a slight rise at the top end, representing 63 transactions between December 2012 and November 2013, compared to 57 during the previous 12-month period.

Last year, the West End of Glasgow had four residential transactions above £1 million, which were the first such sales in this location since 2011. Across Scotland, there were only six transactions at £2 million and above between December 2012 and November 2013 compared to 11 in the previous 12-month period. However, there was an increase in activity in this price band at the very end of last year, which should improve the numbers for the first quarter of 2014.

There were 11 residential sales at £1 million and above across the Tayside counties of Angus, Perthshire and Kinross-shire between December 2012 and November 2013, compared to six during the previous 12-month period.

Estates market

The total value of Scottish estates traded last year was in excess of £54 million, an increase of 17% compared to 2012. There have been varying price tags for the estates traded, with one selling for almost £20 million and the majority for £6 million or less. Out of the 13 estates that sold last year, five transactions were private deals. Our analysis of openly marketed Scottish estates shows that the buyers were split equally between the UK and mainland Europeans.

The majority of viewers have been international businessmen, attracted by the range of sport on offer. The impending referendum on independence in September this year does not appear to have made a significant difference to the market. A handful of buyers are putting their search on hold until the outcome of the vote and the consultation on Land Reform is known. The majority still view Scotland as a relatively safe haven for their money.

Taken from
Market in Minutes: Prime Scotland Residential Market - Feb 2014