The price of prime properties in Scotland fell by 0.4% in the first quarter of 2012, slightly lower than the 1.3£ decline seen in the last three months of 2011, according to new figures published today (Monday 09 April).
The Knight Frank Prime Scottish Property Index also shows that prices are down 3.6% year on year but prices in the Scottish Borders are bucking the trend, up by 0.4% in the first three months of the year. Prices in Edinburgh are holding, remaining unchanged in the first quarter, ending three consecutive quarterly falls.
‘Prime Scottish property prices outside Edinburgh fell again in the first three months of the year, but at a more modest rate than in previous quarters. Average values of prime Scottish country houses have been falling or static for nearly two years now, but the 0.4% decline in the first three months of the year is the smallest fall since June 2010, when prices rose by 0.8%,’ said Grainne Gilmore, head of UK residential research.
There are also wide regional variations in prices. While values in the Scottish Borders are back at levels seen in June 2010, those in the North East of Scotland fell by 0.9% between January and March. However, price falls in Argyll moderated noticeably, with prices declining by 0.7% after two consecutive quarterly falls of more than 2.5%.
‘As we forecast back in December, activity in Edinburgh has bounced back during the first couple of months of the year and we expect to see this ripple out to the regions. There has certainly been an influx of determined vendors in Edinburgh and outside the capital who are keen to achieve a sale and have priced their property to suit the market in order to achieve this,’ said Ran Morgan, head of Knight Frank’s Scottish residential department.
‘Vendors who are still expecting prices in line with what they may have expected to received two or three years ago are struggling to attract interest from buyers. Buyer interest is strongest in the very best properties, priced correctly,’ he added.
He pointed out that while families can move within the major Scottish cities without necessarily uprooting their life in terms of children’s schools or their social life, moving across the country requires a bigger commitment and there is evidence that some families are simply staying put, rather than making such a move.
But there is still strong interest in the very top end properties among domestic and overseas buyers, especially if the property is unique or unusual. ‘House prices in areas with good schools or transport links to Glasgow, Edinburgh or Aberdeen continue to lead the way, with prices in the Borders up 1.6% on the year. Likewise prime property prices in the Lothians have fallen by just 1%, a modest decline compared to the 7% annual fall in prices in the South West, an area which doesn’t benefit from such strong schooling or transport links,’ explained Morgan.
While the recent stamp duty changes are bound to have an effect on the super prime properties, worth £10 million or more, they only apply to the residential element of the property and therefore very few houses will be affected in Scotland, according to the agency. ‘Those buying such properties may consider an extra 2% charge a manageable burden. But, for non-natural persons buying through a company, the stamp duty rise for purchases is 10%, taking the total stamp duty charge to 15%,’ said Morgan.
Activity levels have picked up markedly according to Matthew Munro, partner and head of city sales in Edinburgh. ‘The pace of activity since January has been frantic. There has been a sharp uplift in new stock coming onto the market and this has been matched by a rise in new applicant numbers. There was a sense of frustration in the market at the end of last year and the feeling is now palpable that buyers have decided to make their move, whether they are currently renting or are moving home,’ he said.
‘The strongest sector in terms of activity has been properties up to and around the £1 million mark. There has been a real sea change among vendors, particularly over the last month, with many pricing their homes more competitively, which has in turn engendered even more buyer interest. The signs are that after suffering in the fallout after the financial crisis, the Edinburgh market is getting back onto an even keel,’ he added.