Record year for Scotland’s £1m+ property market in 2022
Last year, the Scottish housing market broke the record for £1 million+ sales in a year, with 504 transactions passing the landmark price, according to a new report.
The figures from property firm Rettie & Co., who were involved in the sale of more than one in five transactions in excess of £1m, shows the number of £1m+ sales across the country surpassed 419 in 2021, which, in turn, had smashed the previous high point.
To put this in context, just two years ago in 2020, there were 280 £1m+ sales in Scotland (itself, a new record at the time). In this period, the Scottish £1m+ market has risen by 80%.
Simon Rettie FRICS, managing director at Rettie & Co., said: “2022 saw another surge in the number of prime residential transactions throughout Scotland.
“We are now seeing a pattern emerge where £1m+ houses are spreading more widely from the previous core areas of Edinburgh and Glasgow with St Andrews and East Lothian showing strong gains as they remain very desirable places to live with a limited number of prime houses coming to market.”
A fiscal drag race
While 2022 has recorded a record volume of £1m+ sales, this has partly been the result of the housing market equivalent of ‘fiscal drag’, where inflation naturally moves a value up into a higher category.
With house price inflation running at around 6.5% in each of the past two years, properties that in 2020 might have been under £900,000 are now over £1m. Indeed, factoring house price inflation from 2021 to 2022 of 6.6%, there are around 130 properties that sold in 2022 that would have likely been under £1m the year before.
This upward price movement has also meant that not only the number, but also the geography of the Scottish £1m+ market is expanding. There are 63 postcode areas in Scotland that have recorded £1m+ sales in the past three years but had no £1m+ sales in the preceding three years.
New demand, new £1m+ areas
Some of the £1m+ locations are the result of natural price movements in pressurised markets, such as in Edinburgh suburbs, while others show the emergence of new demand. Fife, particularly in the hinterland around St. Andrews and the East Neuk is a prime example.
From 2017 to 2019, there were no £1m+ sales in this region, but in the past three years there have been 17. This emerging market is building on the prime values that are being achieved in St. Andrews.
In 2022, the 17 £1m+ sales in St Andrews (KY16) included a £3.6m sale that exceeded £2,000/sqft.
The rise of the suburbs
One of the major trends in the property market over the past two years has been the increase in demand for space as a result of increased working from home and lifestyle preferences. This led some to seek country lifestyles, which sparked a rise in sales in rural towns and regions that accounted for almost 25% of £1m+ sales over 2020 and 2021.
In 2022, while rural living still accounts for around 22% of £1m+ sales, the majority of the market remains in urban areas. One of the trends that has emerged initially in 2021, but has cemented itself in 2022, has been the rise of £1m+ sales in Edinburgh’s suburbs.
Concentration on the east
Historically, Edinburgh’s New Town (EH3) has consistently topped the charts as the home of £1m+ sales in Scotland, making up as much as 39% of Edinburgh’s £1m+ sales back in 2016. Even in 2020, EH3 represented just under a quarter of £1m+ sales in the capital. However, in 2021, EH3 lost its crown to West Edinburgh (EH12) and last year, 2022, the Southside (EH10) came top of the £1m sales ranking, with EH3 tied second.
This change in the concentration of £1m+ sales in Edinburgh can be attributed to a couple of trends in the market. First, there has been an increasing pressure and demand for family housing within the city, especially within desirable neighbourhoods with high quality housing and good school catchments, such as Edinburgh’s Southside.
Another key reason has been new build development. In 2021, the CALA Homes development at Donaldsons brought a unique and high-quality urban lifestyle to the city. In 2022, the Craighouse development has delivered high specification townhouse living in the leafy suburb of Craiglockhart.
Elsewhere in the city, areas such as Newington, to the east of the ever desirable Grange, have seen prices rise and push over £1m. In 2020, there was only one £1m+ sale in the EH16 postcode, but in 2022 there were seven.