Prices increased by 1.3% and are 4.9% higher on an annual basis and so far in 2014 transactions are 8% higher than a year ago, according to the latest report from real estate firm Knight Frank.
Low stock levels and high demand are the main two characteristics which have typified the Edinburgh market so far this year and they have put upwards pressure on price.
A snapshot of stock levels at the end of September reveals that there were 27% fewer properties available for sale than the same time last year. However, applicant numbers were 19% higher in 2014 to date compared to 2013 and viewings increased by 1% over the same time.
According to Knight Frank, it is evidence of just how resilient the Edinburgh property market has been this year in spite of the uncertainty surrounding the outcome of the referendum. Indeed, agents reported activity only noticeably slowed in the three week period before the vote. Since the result was announced activity has returned to more normal levels, suggesting that at least for now it is back to business as usual.
The result means there is now a more certain environment for the property market to function and it is expected that this, combined with growing consumer confidence, should act as a further boost for the city’s already robust prime market.
‘While the flurry of activity that was predicted in the event of a No vote hasn’t materialised yet, we have dealt with a number of buyers and vendors who put off making decisions until after the vote,’ said Edward Douglas-Home, head of Edinburgh City sales at Knight Frank.
‘The recent figures highlight just how buoyant the Edinburgh market has been. Premiums have been paid for the very best homes in the best locations and high demand from would-be buyers is evident across the market. We expect that activity will continue to pick up in the coming months,’ he explained.
However, despite the optimism in the market, the market has more hurdles to clear, most notably the ongoing negotiations between Holyrood and Westminster concerning further devolution and the upcoming May 2015 UK general election could create more uncertainty, especially when it comes to tax changes affecting high-value residential property.
Additionally, from April 2015, Stamp Duty for Scottish residential and non-residential property sales (SDLT) will be replaced by a new Land and Buildings Transaction Tax (LBTT), which will be administered and collected within Scotland. Guidance surrounding the final rates will be provided this month, but it is expected that buyers of more expensive homes will have to pay more tax up front when purchasing a property.
Meanwhile, the No vote in the referendum could Now that the uncertainty of the referendum is over there could be a rise in the number of people from London who would rather own property in Edinburgh and commute, than live in London.
John Coleman, head of Smiths Gore's Estate Agency business in Scotland, said that it is not just the conclusion of the independence issue that will attract these high end buyers but the enormous difference in price between the two cities. There is also the worry of the proposed mansion tax, which will have more effect down south, and a likely surge in property values in Scotland from a relatively low base makes Edinburgh an attractive investment.
‘One of the main reasons for Londoners relocating to Edinburgh is obviously because you get significantly more property for your money than London by comparison. The Scottish education system is also much admired and Edinburgh has a very high ratio of private schools per head,’ he explained.
‘The pace of life is also somewhat slower here and arguably the quality of life is better. It is easy to commute between London and Edinburgh and many people stay in London during the week and travel home for the weekend. It is probably quicker flying to Edinburgh than trying to get to the Home Counties during the rush hour,’ he added.
The firm has found that a lot of buyers are looking for a garden and garaging both of which are precious and sometimes rare commodities in London. The proposed mansion tax will affect Scotland a lot less than London, making it an attractive option to move.
‘A house worth say £4 million in London would probably cost less than £2 million in Edinburgh. On top of the obvious difference in price, the saving on mansion tax alone could be in excess of £20,000 per annum. And with Scottish house values forecast to go up and investments protected, we predict a flurry of interest from buyers outside Scotland,’ Coleman concluded.
