Prime property prices paused in Scotland at start of year but still up 2.3%

Prime property market price growth paused in Scotland in the first quarter of 2018, but demand at the top of the market remained strong and it outperformed the rest of the UK.

Overall prices were up 2.3% year on year in the 12 months to March 2019 compared with a fall of 1.8% in the rest of the UK, according to the latest analysis market index from Knight Frank.

Cottages emerged as the best performing property type, with average values rising by 3.4% annually and the number of properties sold with a value of £1 million and above was up 23% year on year in the 12 months to January 2019.

However, the report points out that rising uncertainty surrounding Brexit and its potential impact on the economy tempered growth in Scottish country house prices over the first three months of 2019 and values were unchanged compared with December 2018.

Annual growth in Scotland was led by modest increases across the central belt, in the north and in the Borders and more generally, rural locations within commuting distance of employment hubs have been the strongest performers.

Values have also been underpinned by a shortage of supply relative to demand, as well as the ripple effect of stronger performance in Scottish city markets. In Edinburgh prime property prices increased by 7.6% annually, making it one of the fastest growing cities in Europe by price.

The number of prime listings with a value above £500,000 outside of Scottish cities was 8% lower in the first three months of the year compared with the same period in 2018 and 23% lower than the first quarter of 2017, an analysis of Rightmove data by Knight Frank shows.

Agents noted that a lack of clarity politically has made some vendors more cautious about bringing properties to market, though well-presented homes that are priced to reflect market conditions continue to attract buyers.

However, with Brexit leading the headlines and impacting on housing market sentiment, the prime market is driven primarily by needs based purchasers who are moving for work, schooling or because they require more space.

‘The relative value on offer in prime Scottish markets compared to the rest of the UK should drive demand in 2019,’ said Oliver Knight, residential research associate at Knight Frank.

He pointed out that average prices in the prime property market remain around 20% off the pre-financial crisis peak in 2007.