Across Scotland, transactional growth in the higher price bands continues to lift prices, with the average reaching £177,519 during the year ending September 2018; an annual increase of 4%, compared to the year ending September 2017.

The prime market above £400,000 led transactional activity, with the number growing by 8%, from 4,696 during the year ending September 2017 to 5,070 during the year ending September 2018.

Meanwhile, the number of transactions above £1 million reached 197 during the year ending September 2018, up 15% from the 172 during the year ending September 2017.

Edinburgh & Lothians

Edinburgh currently has the fastest growing prime market in the UK, with annual price growth of 6.5% during 2018Q3, according to the Savills prime index.

The average prime values in cities such as Cambridge, Oxford and Bath have grown since 2008 by 30% over the last decade, while the figure in Edinburgh has just reached the level before the housing market downturn. With a thriving financial sector and being a globally recognised tech hub, the market is catching up with the other prime university cities around the UK.

Market strength from Edinburgh continues to spread out to the surrounding Lothians, where prime transactions above £400,000 increased annually by 25% during the year ending September 2018.

Greater Glasgow

Prime activity across Greater Glasgow reached 1,240 during the year ending September 2018, an annual increase of 15% compared to the year ending September 2017.

More higher value activity resulted in 5% annual growth in the overall average transaction price during the year ending September 2018. Prime transactions in the city area of Glasgow were led by the hotspots of West End, Park, Partick and Jordanhill.

Meanwhile, the prime market in the hotspots of Bearsden and Milngavie was led by a strong second hand market and more new build sales above £400,000.

A similar trend was also witnessed in the sought-after locations of Clarkston, Giffnock and Newton Mearns, where the prime market was supported by a strong second hand and new build market.

Country locations

Scotland’s country locations, including the Heartland, the Highlands, Borders, Argyll and Dumfries & Galloway are performing well despite the political uncertainty surrounding Brexit. The oversupply of houses has reduced and there is now a shortage in sought after towns and villages.

The market below £1 million has been less affected by LBTT. The market above £1 million experienced an increase in sales but continues to be fickle and more expensive houses can take longer to sell. Some sellers have had to accept discounted prices.

Outlook

We expect Scottish house prices to perform ahead of the UK average, growing by 18.2% over the next five years. Much like the rest of the UK, growth will be tempered by political uncertainty with Brexit negotiations in 2019, a UK general election in 2022, and the additional factor of Scottish elections in 2021. Yet, Scotland still has room for growth, particularly in popular, well-connected neighbourhoods. In many of these markets, supply falls well short of demand, so competition will drive up values.