Growth in prime sales

The prime second hand residential market, at £400,000 and above across Scotland, showed phenomenal performance, with a 32% annual increase in activity, reaching 2,758 transactions during the year ending March 2014 (see Table 2). The market has been robust from spring 2013 onwards, making it the busiest 12-month period since 2007. The prime market has outperformed the mainstream market across Scotland, where the number of sales increased annually by 20% during the year ending March 2014.

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The prime market is being driven by the hubs of Edinburgh, the Aberdeen area and Greater Glasgow, where transactions increased annually by 29%, 49% and 42% respectively. There has been increased buoyancy in the market in the Tayside region, which includes Angus, Dundee, Perthshire and Kinross-shire, with a return to closing dates.

The region has benefited from the strong Aberdeen area market which has been facilitated by the success of the city’s economy and boosted by the energy sector. Indeed, 20% of Savills buyers in Tayside in the last 18 months originated from the Aberdeen area, with a further 20% of buyers coming from outside Scotland. Buyers from outside Scotland mainly originated from London and other English regions. Overseas purchasers in Tayside originated from locations such as Switzerland, Kenya, Singapore and the United States. Tayside is popular amongst those wishing to relocate to the area, with only 35% of Savills buyers originating from the local area in the last 18 months.

The number of prime transactions across Tayside increased annually by 36%, with the counties of Perthshire and Kinross-shire together accounting for 75% of this activity. Tayside is also a popular area for those wishing to purchase a second home. This sector of the market accounted for 15% of Savills buyers in the last 18 months but remains challenging, given its discretionary nature, with many waiting for improved economic growth and consumer confidence.

Prime values

Prime values across Scotland have fallen over the last few years due to the high levels of stock available on the market. However, the significant increase in prime sales has created a net reduction in stock levels in some hotspots, resulting in an annual rise of 5% in prime values in Edinburgh and 3% in Glasgow during the first three months of this year.

The rebalancing of supply and demand has started in the country locations of Scotland with values in Tayside beginning to stabilise at the start of this year. The growth in transaction numbers across the country locations is being led by the lower end of the market up to £500,000. Property values in this price band have increased over the past year, whilst higher value properties, particularly those in provincial and country locations, are still witnessing a drop in values, as supply and demand balances out.

In the event of a ‘No’ vote majority at the Referendum this September, we anticipate an end to uncertainty. This will lead to further consumer confidence in the housing market, and we predict Scottish prime values potentially rising by 2% at the end of this year, with five year growth up to 2018 matching UK Prime Regional growth as a whole (see Table 1).

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Taken from
Spotlight: Tayside Residential Market