There was an steep rise in transaction levels in the prime residential market in Scotland during the last three months, with the number of sales up by 54% on the same period last year for houses in the £400,000 to £700,000 bracket.
In Edinburgh, the hub of Scotland’s prime market, there was a 71% increase in transaction numbers during the second quarter. Greater Glasgow saw a 63% rise while Aberdeenshire saw a 45% rise.
Faisal Choudhry, head of research for Savills in Scotland says: ‘House price changes tend to dominate commentary and debate within the media’s coverage of the Scottish housing market. However, the number of homes that are being bought and sold provides a much more useful indicator of the health of the market. This demonstrates the ability, willingness and confidence of buyers and sellers to trade property.’
It is not only the level of increased activity that paints a more buoyant picture than at this time last year. The total value prime property transactions between £400,000 and £700,000 rose by 56% from £137 million to £214 million.
Savills anticipates that transaction levels will continue to recover over the next 12 months. Given that planned public austerity measures and mortgage lending constraints may be less significant issues for prime property buyers, the property consultants anticipate that the prime market will continue to see the greatest activity over the next five years.
Prime Scottish values have been rising gently since September 2009. While the long term picture is expected to remain unchanged from earlier forecasts, with a 6% increase in prime prices by 2014, prices are likely to soften to December 2009 levels by the end of the year. Growth is expected to be subdued in the shorter term with flat values until 2012, before rising again.
Faisal Choudhry continues: ‘The Scottish prime market is recovering slowly, but it will still take some time for the surplus stock to work its way through the system and for demand and supply to rebalance.
‘The prospects for longer term house price growth across the residential property market look assured. In line with the basic law of supply and demand the underlying shortage of good quality homes, in places where people want to live, will have a positive impact on values in the medium to long term. Scotland’s general housing undersupply has been exacerbated by falling new housing construction since the downturn.’
Andrew Perratt, head of Savills Scottish residential property adds: ‘The prime market sub £1 million has been the most active, whereas sales of homes valued over £1 million continue to move slowly, with only a slight improvement on last year’s transaction levels.
‘We continue to expect equity-rich prime markets to lead the recovery in terms of both transaction levels and price rises.’