Scotland’s prime country house market sees prices rise in first quarter of 2018

Prime Scottish country house prices increased by 0.1% in the first quarter of 2018 but this modest growth disguises a more active rural market as buyers and sellers adjust to higher levels of tax, the latest analysis shows. Year on year prices in this sector are still higher than a year ago, up 0.3% on an annual basis and sales of properties valued at more than £750,000 are up 9% year on year, according to the index report from real estate firm Knight Frank. Rural homes now looking relatively good value and while the majority of 2017 sales took place in Edinburgh, there were notable increases in East Lothian, West and Midlothian, Stirling and Fife, the report also reveals. Price growth continues to be constrained by the Land and Building Transaction Tax (LBTT) which replaced stamp duty in Scotland three years ago. The report says that according to agents the long term impact of LBTT has been to make prime rural markets across Scotland more needs based, with less activity among discretionary buyers. However, vendors are increasingly taking a more pragmatic approach to asking prices, which contributed to a pick-up in sales over the last year, according to Knight Frank associate Oliver Knight. ‘Initial signs suggest that demand will continue to increase in rural markets this year, especially those within commuting distance of employment hubs, or those with excellent schools, transport links and amenities,’ he said. ‘While the Scottish prime market is primarily driven by domestic sales, an added factor at play is the relative value of sterling for buyers using dollars or other overseas currencies to purchase a home, providing an effective discount,’ he explained. But he pointed out that a lack of new homes offered for sale could weigh on transaction levels. ‘The flipside to fairly modest price growth is that rural markets look increasingly good value, which helped underpin an increase in activity last year,’ he concluded.