As winter approaches, we can reflect on what has been a remarkable period of activity within the prime residential market in Scotland, where transactions above £400,000 hit an all-time record.

A total of 8,755 transactions took place up to the last quarter of the year, which is a staggering 75 per cent increase on the pre-pandemic three-year average. The market is currently showing little sign of slowing down: annual prime value growth of 8.1 per cent is at its highest in 11 years, and focusing in on the top end, we have seen a record level of transactions above £1 million.

The number of new buyers registering with Savills to buy a Scottish property was 61 per cent higher in October than two years ago. And following a surge in seller confidence, according to TwentyCi, the number of property launches above £500,000 was 23 per cent higher this October compared with the same period last year. Yet there is a shrinking pool of stock, with 22 per cent fewer properties advertised above £500,000 in October compared with the pre-pandemic average. This is because well-priced properties are selling almost as quickly as they become available in the most sought-after markets. The result has been competitive bidding, strong premiums and, ultimately, price growth. 

Scotland's country locations have led the prime market over the last year, with buyers from all over the UK and beyond seeking a lifestyle change and value for money. A greater flexibility in their working lives has enabled them to widen out their search areas and this has resulted in the level of prime country transactions sitting 122 per cent above the pre-pandemic average.

Meanwhile, activity in our main cities and suburbs is on the rise again as office workers return and a more normal way of life resumes for many. Latest transaction figures are 63 per cent higher than the pre-pandemic average, with demand and price growth being led by larger homes. While Edinburgh and Glasgow remain the hub of urban market activity, Aberdeen and surrounding areas are witnessing their best prime transactional markets since the oil and gas-driven housing market downturn and Dundee is seeing a record prime transactional market.

Given the well-documented race for space, it is perhaps no surprise that such market buoyancy has also been reflected in the million pound plus market across Scotland, including within its cities. At 251, the capital recorded the lion’s share of Scottish transactions at this level, with six of Scotland’s nine sales above £3 million. This includes the highest price ever paid for a residential property in Scotland (a seven-bedroom home in The Grange, Edinburgh), which sold privately for more than £5 million. Meanwhile the city of Glasgow saw a record 34 million pound plus transactions over the last year.

Looking ahead, with a continuation of hybrid working patterns and changing buyer requirements, there is still a relatively strong core of unsatisfied demand, with 16 per cent of respondents to our latest buyer and seller survey indicating more commitment to moving at some point in the next 24 months.

The ongoing imbalance of demand versus supply underpins our forecast of 4.0 per cent annual growth in prime and mainstream Scottish values next year. However, increased cost of living and gradually rising interest rates are expected to temper medium-term prospects of price growth, as buyers’ spending power is gradually reduced.

An alignment of buyer and seller expectations will therefore be vital in order to maintain market momentum and prevent the market from overheating.

Further information

Contact Faisal Choudhry

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