Annual price growth in Edinburgh’s prime market reaches above 10%
Annual prime property price growth in Edinburgh over the year to September reached 10.5% and the market is outperforming the rest of the UK, the latest index shows.
In the third quarter of the year quarterly growth was 1.9% and over a three year period prices have increased by 17.4%, according to the index from international real estate firm Knight Frank.
The annual figure, up from the 9.4% recorded in the 12 months to June, marks the highest level of price growth in any major UK city tracked by Knight Frank over the same period.
The index report point out that central Edinburgh remains in high demand, aided by both the second hand and new build market and overall stock levels remain down which is starting to impact on sales volumes, slipping back across the market as a whole.
Globally, Edinburgh was ranked sixth in terms of price performance in the most recent Knight Frank prime global cities index, but Oliver Knight, research associate at Knight Frank, points out that it is important to view the strong rate of price growth seen over the last 12 months in context.
‘It follows nearly a decade of fairly subdued growth since the financial crisis. During this period, the market has had to adjust to changes to the tax landscape following the introduction of Land and Building Transaction Tax in 2015, as well as a greater degree of political uncertainty over that time,’ he said.
‘Over the last year however, values have been underpinned by an undersupply of new stock to the market. Our analysis of listings data from Rightmove shows the volume of homes being offered for sale remains supressed. These more depleted stock levels are now starting to impact on sales volumes which have slipped back across the market as a whole,’ he explained.
‘However, this has disguised varying performance at different levels of the market,’ he said. Indeed, much of the decline is accounted for by a fall in activity for homes valued up to £200,000 over the year to July 2018. Sales above £500,000 by comparison were 8% higher year on year and currently stand at near record highs.
The report reveals that central Edinburgh remains in high demand, aided by both the second hand and new build market. Elsewhere, family homes in areas including Murrayfield, Morningside and Newington have been attracting interest.
Despite the positive sentiment surrounding the Edinburgh market, anecdotally there has been a slight cooling of demand of late, especially as the end date for Brexit nears, which could weigh on transaction volumes for the remainder of the year.
Agents note that uncertainty over Brexit is causing a degree of hesitancy among some prospective buyers. ‘The UK will leave the European Union in March 2019, but there remain a number of unknowns including what type of deal, if any, will be agreed. This lack of clarity could weigh on sentiment,’ Knight concluded.