Growth in prime sales

We predict the Referendum result to further boost the market in Scotland. The prime residential market (at £400,000 and above) showed a strong performance, with a 39% annual increase in activity, reaching 3,035 transactions during the year ending July 2014 (see Table 2 below) .

The market has been robust from Spring 2013 onwards, making it the busiest period since 2008. Sales in the mainstream market across Scotland increased annually by 23% during the year ending June 2014. While there was anecdotal evidence of a market slowdown in the immediate run-up to the Referendum, we expect such caution to dissipate as we enter the autumn market.

The prime market has been boosted by the hubs of Edinburgh, the Aberdeen area and Greater Glasgow, where activity collectively increased annually by 43%. Edinburgh was heavily supported by strong growth in the hotspots of New Town and the West End, where prime transactions collectively increased annually by 52%, representing 170 sales.

The prime southern Glasgow suburbs of Pollokshields, Newlands, Giffnock and Newton Mearns experienced a strong market, with a combined 42% annual increase in activity, representing 152 sales. These areas continue to be supported by top quality education facilities and excellent transport links. Prime activity in the Aberdeen Postcode District of AB15, which includes the suburbs of Bieldside, Cults and the West End, increased annually by 49% and made up around a third of prime transactions across the Aberdeen area during the year ending July 2014.

The market strength in the core locations of Edinburgh, Aberdeen and Glasgow has spilled out to some of Scotland’s provincial locations, such as Tayside, where prime transactions increased last year by 26% and also the Midlothian area, south of Edinburgh, where prime transactions doubled to 22 during the year ending July 2014, compared to just 10 during the previous 12-month period.

With a 39% annual increase in activity, Fife is one of only six areas in Scotland where prime sales exceeded the 100 level, reaching 118 during the year ending July 2014. Unsurprisingly, St Andrews remains the dominant hotspot, accounting for 38% of prime sales in Fife. However, activity throughout the rest of the county is evenly spread with prime sales taking place in the East Neuk, Cupar, Dunfermline and Burntisland areas.

The prime markets in the country locations of Ayrshire, Highlands and the Borders also improved during the year ending July 2014 following restrained performance in previous years. However, within these areas, prime market activity is mainly concentrated in more densely populated locations, and has yet to spill out to more remote locations 
in Scotland.

For example, in Ayrshire, where 
prime transactions increased annually by 36%, over half of prime sales took place in the towns of Ayr and Troon. Similarly, in the Borders, where prime transactions almost doubled on an annual basis, around a third of activity took place in Melrose and Peebles. Another example is the Highlands, where prime transactions increased annually from 33 to 58. However, a third of prime activity in this area took place in and around the city of Inverness.

Click Table 2 below to enlarge

Prime values

While prime values across Scotland have grown slightly by a modest 1% this year, the recovery is more evident in urban, compared to country locations. Prime values in the city areas of Edinburgh and Glasgow have increased by 4% and 2% respectively this year, following a rise in transactions and an increasing lack of stock. While transaction numbers in the country have also picked up, until this point, we have not seen any significant growth in values. This reflects the wider trend seen across Britain for urban markets improving, where a buyer’s purchasing decision is more likely to be driven by a catalyst, such as job relocation or schooling, rather than a simple choice to upsize or downsize.

While Scottish prime market conditions have improved this year, values in Edinburgh and Glasgow are currently 18% below their 2007 
peak while values in the country locations are currently 27% below their 2007 peak, mainly due to the uncertainty surrounding the Referendum. In comparison, prime markets in some comparable hotspots south of the border have shown strong recovery since the beginning of 2013. Prime values in areas such as Bath, Oxford and York are exceeding their 2007 peak.

Following Scotland’s decision to remain part of the Union, we expect strong recovery in prime Scottish values. We predict Scottish prime values to rise by 2% by the end of this year, and further annual growth of 3.5% by the end of 2015, exceeding the Prime UK market (see Table 1). We expect prime values in Edinburgh and Glasgow to reach their 2007 peak by 2016, with country house values reaching that level by 2018.

Taken from
Spotlight: Scotland has voted 'No'