Prime country house price growth picked up in Scotland in the third quarter of 2018, but buyers remain cautious amid political uncertainty, according to the latest index to be published.
Overall, prices rose by 0.7% between July and September 2018 and by 2.1% year on year, the strongest rate of annual growth recorded by the Knight Frank index since the end of 2014.
‘While modest, this is the strongest rate of annual growth recorded by our index since the end of 2014. On a longer term basis, prime country house prices in Scotland are up by 3.6% over the last five years,’ said Oliver Knight, research associate at the firm.
‘The consequence of this relatively subdued growth, during a period when prices in some urban markets have risen by as much as 26%, is that many country locations currently appear comparatively good value, especially when compared with prime markets elsewhere in the UK,’ he explained.
However, overall prime sales volumes remain subdued. The number of homes valued at more than £500,000 sold in non-city markets across Scotland fell by 4% over the year to July 2018 compared to the previous 12 month period, according to the analysis of transaction figures from the Registers of Scotland.
According to agents, the tick down in activity is not solely due to demand, but also due to lack of supply of homes on the market, which in turn is supporting pricing.
Knight Frank’s analysis of listings data from Rightmove reveals that so far this year 2.3% fewer homes valued above £500,000 have been put up for sale across Scotland compared with the same period in 2017. Stock levels were 6% lower than in 2016.
Knight pointed out that the wider political landscape is also causing short-term uncertainty in the market. ‘Questions remain regarding what the UK’s future relationship with the European Union will be following Brexit. As these questions remain unresolved, there is a more cautious attitude being adopted by some prospective vendors and buyers which has weighed on activity and supply,’ he said.
The index also reveals that the market above £1 million has been more buoyant, with sales up by 4% year on year and the report says that much of this can be accounted for by an increase in transactions in urban markets, as well as in areas within commuting distance of city hub
However, an added factor at play in the current market is the relative value of sterling for buyers using dollars or other overseas currencies to purchase a home, providing an effective discount, Knight added.
