Rising demand for property in Edinburgh has underpinned prices, particular in the city centre over the first three months of 2017, new research shows.
Prime property prices in Edinburgh increased by 1.1% in the first quarter of 2017, taking annual growth to 3%, according to the latest city index from real estate firm Knight Frank.
The index report points out that price growth has been underpinned by rising demand, with a 31% increase in the volume of new buyer enquiries year on year in the first quarter while the number of new homes listed for sale was 38% lower compared with a year earlier.
The data shows that Edinburgh’s city centre flats outperformed in terms of price growth, rising by 1.8% between January and March and the overall quarterly growth of 1.1% was only the second time quarterly price growth has exceeded 1% in the last two years. The annual growth of 3% was up from 2.6% at the end of 2016.
The pick-up in values so far this year has been underpinned by a growing imbalance between supply and demand across the city. New buyer enquiries, for example, were nearly double that seen in the previous quarter and almost a third higher than in the first quarter of 2016.
Viewings were also up by 45% year on year between January and March and the report points out that rising demand is an indication that buyers are starting to adjust to higher rates of taxation, although purchase costs remain a factor.
Flats attracted the highest level of interest over the course of the quarter contributing to a
1.8% rise in average values over this time. Houses saw more modest growth of 0.8%.
The report also shows that at the top end the gulf between supply and demand is even more pronounced. There were 54% fewer properties valued above £500,000 put up for sale compared to the same period last year, with a 64% fall in properties priced above £750,000.
‘Rising demand for property in Edinburgh city centre is being underpinned by growing confidence among buyers regarding the strength of the market,’ said Edward Douglas-Home, head of Edinburgh city sales at Knight Frank.
‘Higher purchase costs as a result of changes to Land and Buildings Transaction Tax (LBTT) remain a concern, but it’s a shortage of good quality stock relative to new buyers that has been the primary driver of the market at the start of 2017,’ he explained.
But he pointed out that Knight Frank sales volumes so far this year have been robust. ‘While transaction volumes were lower than in both 2015 and 2016, when the market received an artificial boost from buyers bringing forward deals ahead of changes to property taxation, they were comfortably higher than the comparable period in 2014 by 41%,’ Douglas-Home added.
