Considering 2015 as a whole, prime sales (second hand transactions at £400,000 and above) outperformed the overall market, with an eight per cent annual increase. Much of this activity took place prior to the introduction of LBTT, which brought higher rates of taxation to the prime market. Furthermore, the number of transactions at £1 million and above reached its highest level since 2008. Prime markets in suburban and commuter areas across Scotland’s Central Belt performed strongly during 2015, with growth spreading out from core urban hotspots.
This upturn in demand is driving an improving development land market. Sentiment for development land in Scotland’s cities remains positive, with strong annual growth in the Savills Residential Development Land Index, particularly for greenfield land around Edinburgh, Perth and Stirling. The overall Savills index for greenfield land in Scotland increased year on year by 9.6 per cent during December 2015 compared with December 2014.
The development market has been further supported by Government incentives, such as the Help to Buy Mortgage Guarantee and new build schemes, which made up eight per cent of all residential activity in Scotland between October 2013 and September 2015. The recently announced extension of Help to Buy (Scotland) scheme to 2019 is expected to further support Scotland’s new home sales.
The overall Savills index for urban land in Scotland increased year on year by 20.4 per cent during December 2015 compared with December 2014.The increase in values, particularly in Edinburgh and Glasgow, reflects a rise in demand from housebuilders and developers, due to an improved economy, stronger markets and increased viability.
However, the fall in sentiment within the Aberdeen development land market, due to the continued low oil price and uncertainty over the future of the industry, has impacted negatively on the overall Scottish development land index.
Savills Residential Development Land Index: Performance across Scotland’s cities