Edinburgh property market outstrips the UK

A new report is showing Edinburgh’s residential property market has the highest growth of all cities in the UK.

Scotland is now seeing its strongest housing market for a decade, including a resurgence of the million pound market and a 30% increase in new build transactions

Edinburgh’s residential property market saw higher levels of growth, according to Savills latest research report which was launched to 500 representatives of Scotland’s property sector at the Edinburgh International Conference Centre yesterday (Wednesday).

The research reveals that the average house price in Scotland’s capital increased by 10.2% in December 2017 compared to December 2016 (reaching a record high of nearly £285,000) and the value of the housing stock across the city grew by £7.5 billion from £61.4 billion in 2016 to £68.9 billion last year. This was more than any other Local Authority district in the UK as a whole.

Faisal Choudhry, Savills’ head of residential research in Scotland said: ‘Scotland has witnessed its strongest market since 2007, with price growth now outperforming London. Values will continue to rise due to a lack of supply and strong city economies.

‘In particular, Edinburgh’s residential market profile continues to excel. The lack of supply and strong domestic and international demand for property in the capital is one of the main reasons behind a rise in prime values in Edinburgh City.’

Homes in Morningside, Edinburgh

Prime transactions (above £400,000) in Edinburgh reached a record 1,733 during 2017, which was 15% higher than 2016. Transactions above £750,000 increased from 247 in 2016 to 274 in 2017. The southern hotspots of Grange, Morningside and Merchiston accounted for the largest proportion of prime activity, with a total of 377 transactions last year, overtaking the traditional million pound hub of the New Town.

Ben Fox, head of Savills Edinburgh Residential added: ‘The number of prime second hand properties launched on to the market in Edinburgh’s New Town fell by 33% last year, compared to 2016. LBTT is still affecting supply issues here, and the lack of choice has resulted in a vicious circle, as potential sellers delay launching to the market until a suitable property is available.’

The number of new build transactions in Edinburgh increased by 30% last year. Some of the highest sales volumes took place in the suburban locations of Liberton and South Queensferry.

However, the strongest growth in transactions last year was witnessed closer to the city centre. The redevelopment of Edinburgh St James at the eastern edge of Princes Street is encouraging a gravitation towards the east of the city centre.

Indeed, the highest number of new build transactions took place in eastern locations of the city around McDonald Road and Leith Walk.

Looking ahead, value growth across Edinburgh will continue, with some new build properties, at developments such as Donaldson’s, beginning to exceed £700 per square foot.

Scotland’s million pound market saw a remarkable recovery last year, following a slow market at the start of 2017. The Land and Buildings Transaction Tax has impacted the top end of the market since its introduction in April 2015, but latest Savills research reveals that a recovery is well underway.

The New Town is the traditional million pound hub in Edinburgh

There were a total of 173 transactions for the year as a whole with 117 taking place in second half of 2017. This compares to 167 in 2016 and 289 at the peak of the market in 2007.

However Land and Buildings Transaction tax continues to have a paralysing effect on the market above £2 million. Only six sales took place at this level last year, which is the lowest annual number since 2004.

Faisal continued: ‘There is a real sense of confidence in the Scottish market at present. While we are seeing an uplift in domestic wealth, the million pound market has been fuelled by buyers from outside Scotland and across the globe, with those buyers attracted by the comparative good value for money and quality of life.’

The proportion of million pound transactions is becoming increasingly concentrated in Edinburgh, reaching 62% in 2017 compared to a 10 year average of 49%. There were 108 million pound transactions in Edinburgh during 2017, which is the highest annual figure since 2007.

Some of highest concentration of million pound activity in takes place in the EH3 6 postcode of the New Town. However, a drop in supply resulted in just 10 transactions last year compared to 19 in 2016. On the other hand, an increase in supply resulted in more activity in suburban locations.

East Lothian moves up to second place in the million pound sales league table, overtaking both Glasgow and Aberdeen. There were 10 million pound transactions in East Lothian, concentrated in Inveresk, North Berwick and Archerfield. Midlothian witnessed its first million transactions in three years, with two taking place in Eskbank and Lasswade. West Lothian also saw its first million pound activity since 2015, with two transactions taking place in Linlithgow and West Calder.