There has been further strong evidence of a steady recovery in Scotland’s residential market, with Aberdeenshire leading the way.

This is apparent in the 20% annual increase in Scottish million pound sales, and a rise in buyer interest across the prime market since the Referendum. The announcement of the proposed Land and Buildings Transaction Tax (LBTT) rates in recent weeks is motivating both buyers and sellers.

"Prime residential continues to lead the Scottish housing market with a 43% annual increase in activity"

However, a lack of prime stock to meet demand in city hotspots is slowing the rate of sales growth but keeping prices strong. Aberdeen City has been particularly affected by this constrained supply, with only a 25% annual rise in prime sales against 89% in Aberdeenshire and 43% across Scotland as a whole.

Prime market leads

Prime residential continues to lead the Scottish housing market (£400,000 and above) with a 43% annual increase in activity. This is a significant rise compared to 6% last year and represented 3,244 sales (Table 1). Sales in the mainstream market increased by a more modest 19%. Although transactions which took place prior to September have not yet registered, there is anecdotal evidence of a slowdown in the immediate run-up to the Referendum.

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This was quickly followed by a marked upswing in activity as both buyers and sellers of prime property became motivated to make quick decisions to avoid the increased LBTT tax burden that will be introduced post April 2015.

The prime market has been boosted by the hubs of Edinburgh, the Aberdeen area and Greater Glasgow, where activity collectively increased by 46%. Together they account for 75% of Scotland’s prime transactions.

Prime activity in the West End, Bieldside, Cults, Milltimber and Peterculter made up over a third of prime transactions across the Aberdeen area during the year ending September 2014, representing 241 sales. Demand has far outstripped supply in such hotspots, restricting the increase in prime sales across the city.

Meanwhile, prime transactions in the Aberdeenshire and Kincardineshire county area almost doubled in the same period, reaching 325 sales. This represents a remarkable recovery compared to the previous 12 months when there was only a 2% annual rise in prime sales. This phenomenon has been driven by the satellite hotspots of Inverurie, Aboyne, Banchory, Westhill and Ellon.

The spill-out effect is also being felt, but to a lesser extent, in provincial and country locations including Fife, Borders and the Highlands. 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.

Taken from:
Spotlight: Aberdeen Area Residential Market