Million pound property market resurgence as Scotland attracts wealthy buyers

Scotland’s million pound market saw a remarkable recovery last year, following a slow market at the start of 2017.

The Land and Buildings Transaction Tax has impacted the top end of the market since its introduction in April 2015, but latest Savills research reveals that a recovery is well underway.

There were a total of 173 transactions for the year as a whole with 117 taking place in second half of 2017. This compares to 167 in 2016 and 289 at the peak of the market in 2007.

However Land and Buildings Transaction tax continues to have a paralysing effect on the market above £2 million. Only six sales took place at this level last year, which is the lowest annual number since 2004.

The proportion of million pound transactions is becoming increasingly concentrated in Edinburgh, reaching 62 per cent in 2017 compared to a 10 year average of 49 per cent. There were 108 million pound transactions in Edinburgh during 2017, which is the highest annual figure since 2007. Some of highest concentration of million pound activity in takes place in the EH3 6 postcode of the New Town. However, a drop in supply resulted in just 10 transactions last year compared to 19 in 2016. An increase in supply on the other hand resulted in more activity in suburban locations.

East Lothian moves up to second place in the million pound sales league table, overtaking both Glasgow and Aberdeen. There were 10 million pound transactions in East Lothian, concentrated in Inveresk, North Berwick and Archerfield. Midlothian witnessed its first million transactions in three years, with two taking place in Eskbank and Lasswade. West Lothian also saw its first million pound activity since 2015, with two transactions taking place in Linlithgow and West Calder.

Over in the west, million pound transactions across Greater Glasgow dropped slight from 27 in 2016 to 24 in in 2017. But the 2016 figure was boosted by new build activity in South Lanarkshire. But there was a recovery in Glasgow City and East Dunbartonshire, with nine and seven transactions respectively compared to six and five in 2016.

Outside the Central Belt hubs, million pound activity remained relatively unchanged in Fife, with six during 2017 compared to five in 2016. There were three transactions in Highland, the first such activity in two years. Transactions in the Scottish Borders remained unchanged at three last year, however Perth & Kinross and Aberdeen City saw a sharp reduction. There were only five in Aberdeen, the lowest since 2006 and only two in Perth & Kinross, compared to eight in 2016.

Faisal Choudhry, director of Savills research (Scotland), said: “There is a real sense of confidence in the Scottish market at present. In addition, looking at the market just below a million, residential activity in the price band between £750,000 and £1 million took a hit during 2016 as it struggled to adjust to the higher rates of Land and Buildings Transaction Tax (LBTT). However a resurgence, especially during the second half of 2017, pushed the annual figure to 535, compared to 466 in 2016, as buyers and sellers adjusted to LBTT.”

Andrew Perratt, head of Savills Residential (Scotland), said: “The latest million pound statistics are further testament to Scotland’s burgeoning market. There is a real sense of confidence north of the border and our latest research reveals Scotland will outperform London and most other regions of the UK over the next five years, with house prices here expected to grow by 17 per cent.

“While we are seeing an uplift in domestic wealth, the million pound market has been fuelled by buyers from outside Scotland and across the globe, with those buyers attracted by the comparative good value for money and quality of life.”

Dr John Boyle, director of research & strategy at Rettie & Co, added: “There have been some significant shifts in the £1m plus market in Scotland in recent times. There has been a concentration of such sales in Edinburgh and surrounding areas and new build sales are playing a much bigger role in this market, partly due to the lack of available stock elsewhere. The performance of this market is important in a Scottish context, even though it only accounts for 0.2% of all Scottish house sales, it contributes around 7% of LBTT revenues.”