Edinburgh property market seeing strong demand and steady price growth

Image The residential property market in Edinburgh is experiencing high demand, especially at the middle to high end of the market, new reports show. The long term picture is one of steady growth. A comparison of property prices by agents Strutt & Parker shows that in March 2015, the month leading up to the introduction of the new Land and Buildings Transaction Tax (LBTT), and March 2016 reveals a 26% fall in average value. In March 2015 prices averaged £320,466 but in March 2016 this was down to £237,226, much of which has been put down to the distortion caused in the market by LBTT last year. “However, the average value in March 2016 is significantly up on the average price in March 2014 which was £209, 624 and March 2013 when it was £200,744, indicating a steady upward trajectory in property prices,” reported by propertywire. ‘The drop in average value simply serves to underline the huge spike in sales before the introduction of LBTT in April last year and it highlights the importance of experience when interpreting housing market trends,’ said Blair Stewart, head of Edinburgh City Residential Sales at Strutt & Parker. ‘It is not surprising that the 2016 average property price is less in comparison. It is more important to look back over the last three years during which time, taking 2015 out of the equation, we can see a steady rise in the city's average property price,’ he pointed out. In March, there were 247 sales in Edinburgh of which 225 were £300,000 to £750,000, 13 in the £750,000 to £1 million range and nine at over £1 million, up from 159 in February and 146 in January but down from 363 in March 2015, again underlining the surge in sales before the introduction of LBTT. ‘The high volumes and associated lower values in Edinburgh are partly reflective of a surge in the purchases of investment properties before the LBTT surcharge was introduced at the start of April. In general, additional and investment properties are lower in value, which is illustrated by both the jump in transactions and drop in average value,’ Stewart explained. ‘Correspondingly, we have noticed an adjustment in the average sale prices of the properties we are selling in Edinburgh change from around £780,000 in 2015 to approximately £600,000 in 2016. However, these figures also show a strong performance in the market in the first months of 2016 and I am confident we will see that continue into the summer,’ he added. He also pointed out that behavioural changes following two tax regime changes in a year are still playing out so a true picture of the market will become clearer over the next six months once there can be an analysis of figures which have not been distorted by either LBTT or the additional 3% surcharge on additional homes introduced this April. Agents CKD Galbraith is also reporting that demand for middle to high end residential property in Edinburgh city centre and the surrounding areas has increased strongly since the start of 2016. It says that demand has outstripped the supply of homes for sale across Edinburgh and the Lothians during the first quarter of 2016 and this has contributed to the competitiveness and speed of transactions completed during this period. ‘The number of new properties coming to the market dropped during the winter months, with many home owners postponing selling until the traditionally busier spring months or until the weather had improved enough to make grounds and gardens presentable,’ said Jamie McNeill, head of residential sales at CKD Galbraith’s Edinburgh office. ‘However, the good quality properties, in desirable locations, that did appear on the market from early January to late March were extremely quick to sell and attracted high levels of interest. The Edinburgh office also witnessed an equal surge in interest for those properties that had not sold during the quieter winter months at the end of last year,’ he explained. He pointed out that while Edinburgh city centre property continues to be highly sought after, the firm has also seen a significant increase in demand for homes in suburban and semi-rural locations, such as East Lothian, Midlothian and West Lothian, with property prices in the latter rising by 7.2% from February 2015 to February 2016, compared with 3.2% in Edinburgh. He added that the Edinburgh office handled a number of sales during the first quarter of 2016 that received offers in excess of their asking price and sold within several weeks of appearing on the market.