Prime Scotland house price growth, which remains higher than the rest of the country, is beginning to steady. Prices went up by 1.5% in the three months to June 2022. This puts them 8.0% higher than a year ago.
Faisal Choudhry
We are beginning to see a change in some of the trends that have characterised Scotland’s prime market since the beginning of the pandemic. Potential sellers have been electing to take advantage of the strong run of price growth that has taken place over the last two years with more choosing to put their properties on the market. Consequently, the level of housing stock above £500,000 available to buy is returning to pre-pandemic levels, according to data provider TwentyCi.
While there is more choice, we continue to see healthy levels of demand. The number of new buyers who registered with Savills between April and June to buy a Scottish property - though marginally lower than the febrile market of 2021 - was 104% higher than the same period in 2019.
This demand continues to translate into record levels of buying activity. The number of agreed sales from April to June between £500,000 to £1 million was slightly above last year and 96.2% more than the same period between 2017 and 2019, according to TwentyCi. Above £1 million, agreed sales were 19.8% more than last year and 106% higher compared to pre-pandemic levels.
Strong demand levels and a lack of available stock has led to 16.7% growth in Scotland’s prime house prices in the two years since the start of the pandemic. However, higher costs of living and growing concerns for the UK-wide economy are starting to have an impact on buyer sentiment.
Indeed, there are signs of softening demand from discretionary buyers at the top-end of Scotland’s prime market in both town and country locations.
As a consequence, prime Scotland house price growth, which remains higher than the rest of the country, is beginning to steady. Prices went up by 1.5% in the three months to June 2022. This puts them 8.0% higher than a year ago. However, this figure is slightly down from the 8.8% annual growth in the 12 months to March 2022, according to the Savills Prime index.
With prime values in village and rural areas 50% lower than the rest of Britain in terms of prices per square foot, Scotland’s country locations continue to offer value for money, especially when property size is considered.
After two years of the pandemic-fuelled race for space, quarterly price growth in Scotland’s prime urban markets is now on a par with surrounding village and rural areas, as the market rebalances in response to the desire to be close to amenities, families and places of work.
This was led by Edinburgh City where there is more activity in the market for larger flats. Meanwhile, the desire to live in a large family home remains top of buyers’ wish lists both here and in Glasgow, where record prices are being paid for a limited supply of townhouses in the city’s G12 postcode.
Recent price growth in Scotland’s country locations was led by the west coast of Argyll and Ayrshire, the villages of Peeblesshire and areas surrounding Edinburgh, including Fife and West Lothian. However, a low level of available stock remains an issue and is continuing to sustain prices in some locations, in particular East Lothian. Meanwhile, Perthshire continues to see an increased supply of holiday homes coming to the market.
Whilst prime price growth in Angus and Dundee has softened in recent months, northern parts of Angus and southern areas of Kincardineshire at the edge of Aberdeenshire outperformed.
House prices across the Aberdeen area, especially in parts of Aberdeenshire within easy reach of the city are recovering as excess stock continues to be absorbed. Since the beginning of the pandemic, there has been more demand for prime properties, mainly up to £1 million. However, it remains a price sensitive market at the very top-end above £1.5 million.
As seasonal trends make a comeback, there remains a surplus of motivated buyers going into the autumn market seeking good quality and appropriately priced properties across Scotland’s town and country hotspots.
The prime market is less reliant on mortgage finance with buyers more insulated against economic pressures due to higher levels of disposable income. However, weakening sentiment across the wider housing market does have the capacity to feed into higher price bands too.
As a result, we are likely to see a continued slowdown in prime price growth towards the end of this year, with realistic pricing becoming key to securing a sale as the market becomes more price sensitive.
Against a challenging economic backdrop and more choice for buyers, some sellers may need to respond to the change in market conditions by slightly adjusting their price expectations and realigning with buyers who are now exercising more caution in their budgets and price offers.