But Edinburgh bucked the trend with prices remaining stable and prices in the Scottish Borders have been resilient, with no change reported between October and December, and a slight 0.4% rise over the last 12 months.
However, this has been an exception rather than the norm, and prices in the Lothians and the South West have suffered larger falls of 5.2% and 3.7% respectively compared to a year previous, the latest data from Knight Frank shows.
In Edinburgh, as has been the case since June 2012, prices remained static in the final quarter of the year, taking the annual increase in house prices to a modest 0.6%.
‘The prime market is hugely varied in Scotland. Homes have to look good value if they are to sell and prices may have to adjust further for this to happen,’ said Ran Morgan, head of Scotland residential at Knight Frank.
‘The lack of mortgage finance continues to impact the Scottish country house market, with many choosing to stay in their current home rather than moving up the housing ladder. However exceptional homes continue to attract attention, from both domestic and overseas buyers,’ he added.
He pointed out that there has been a decline in interest from buyers in the traditional commuter counties around Edinburgh with buyers who are looking to ‘trade up’ or ‘trade down’ preferring to do so within the city. Also the increase in stamp duty for properties worth £2 million plus from 5% to 7% in March 2012 has had a knock-on effect on homes at the top end of the market.
‘It is also interesting to note that plans have been unveiled to replace the current stamp duty regime and replace it with a new Land and Buildings Transaction Tax from April 2015. The new tax on land and property transactions will abolish the slab structure and instead relate to the actual value of the property,’ he explained, adding that actual rates and thresholds will be not set until nearer April 2015.
Matthew Munro, partner in Knight Frank’s Scottish residential department, said that although values in Edinburgh’s prime residential market remain static, there has been a significant increase in turnover in the core middle market over the course of the year and the strongest sector in terms of activity has been properties up to and around the £1 million mark.
‘This is reflected by a noticeable upturn in the number of applicants looking to downsize from their current homes. At the top end of the market buyers are more hesitant to commit to deals with some waiting for a further dip in prices,’ he pointed out.
‘However, in line with seasonal trends, viewing figures are up for the quarter as a number of expats return home for the holidays. Good quality flats and smaller residential houses in Murrayfield and the New Town areas of the city have been in demand with the greatest activity on the south side of the city,’ he added.
