Scotland Residential
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Spotlight - Spring 2019 SPOTLIGHT Savills Research Scotland Residential Edinburgh’s economic growth The million pound market New build opportunities Overview Edinburgh made up 37% of Scottish transactions above £400,000 in 2018 Scotland’s residential market remains unfazed by the political uncertainty currently affecting the rest of the country. The number of transactions increased by 2% at the end of last year, supported by a record- breaking prime market. Meanwhile, the official UK House Price Index for Scotland has seen positive annual growth for the last 33 consecutive months. However, what happens next is less clear cut. Our forecasts assume that if Article 50 is extended, it is for a relatively short period and that, ultimately, we avoid Edinburgh’s still a no-deal Brexit. That would give households greater going strong confidence over their future finances, which in turn should A more stable and considered market is expected this year underpin buyer sentiment to support an improvement in Edinburgh remains the jewel of Scotland’s housing Economic growth has increased more over the house price growth in 2020. market, making up 37% of prime and 61% of million last five years than most UK cities, with a higher We cannot rule out a delay in pound transactions in 2018. Transactions above percentage of the working-age population in this should negotiations to £400,000 reached 1,931 during 2018, an increase employment. Edinburgh also has a large proportion leave the EU become more of 12% compared to 2017, as more stock became of workers in high-skilled occupations, such as the drawn out. Meanwhile in the available. Million pound transactions reached 128, finance and insurance sector, which currently makes event of a no-deal Brexit, the the highest since 2007 and up nearly 20% from 2017. up 20% of Edinburgh’s economic output. impact on the housing At 7%, annual price growth in Edinburgh’s prime Looking ahead, we expect a more stable and market will be dependent on market was the highest in the UK according to the considered market in 2019, driven by realistic the Government’s response Savills index. Strong premiums and record prices per pricing. Whilst some buyers are waiting for the to support the economy. square foot continue to be achieved. political dust to settle, there remains a surplus of Despite the uncertainty, The capital of Scotland’s international profile motivated buyers, despite an increase in the number Scotland still has room for and economy underpins its strong housing market. of sellers. growth, particularly in popular, well-connected Residential values annual change forecasts neighbourhoods. In many Scotland has room for further growth, as market sentiment remains positive of these markets, supply falls well short of demand, 5-year so competition will drive 2019 2020 2021 2022 2023 compound growth up values. 14.8% Mainstream UK 1.5% 4.0% 3.0% 2.5% 3.0% Prime GB 11.9% Regional 0.5% 1.0% 3.0% 2.5% 4.0% Faisal Choudhry Mainstream 18.2% Scotland Head of Scotland 2.5% 5.0% 3.5% 2.5% 3.5% Residential Research Prime 0141 222 5880 14.2% [email protected] Scotland 2.0% 2.0% 3.0% 3.0% 3.5% Source Savills Research 2 Edinburgh and the Lothians Whilst some buyers are waiting for the political dust to settle, there remains a surplus of motivated buyers and sellers Prime hotspots Our prime market analysis of A similar trend was also witnessed last year, mainly due to a lack of Edinburgh covers 10 hotspots that make in the outer suburbs of Barnton, supply below £200,000. However, up the majority of transactions above Cramond and Colinton where stable an increase in transactions above £400,000. Edinburgh’s inner suburbs second hand activity was offset by a £200,000 led to a 7% annual rise were the star performers in 2018. These drop in new build transactions. in the average transaction price include the Grange, Morningside and last year. Merchiston area, south of the City Wider Edinburgh market The prime market, especially in East Centre, where prime activity reached Whilst Edinburgh’s prime transactional Lothian and Midlothian, continued to 399 last year, supported by a strong market increased last year, it was offset rise, with transactions above £400,000 second hand market. by a drop in supply and (subsequently) reaching 470 during 2018, which was Ravelston was the stand-out area, transactions below £400,000, thus higher than the number in the Aberdeen where prime transactions, mostly leading to an overall 9% fall in area. The increase was mainly due to second hand, increased by 44% from Edinburgh City transactions across all more new build transactions in North 59 in 2017 to 85 in 2018. Neighbouring price bands. Berwick, Dunbar and Haddington Murrayfield witnessed 155 prime However, some areas bucked the in East Lothian and also Bonnyrigg, transactions, up by 20% from 2017, trend, including the second hand market Loanhead and Roslin in Midlothian. supported by new build activity at in the EH3 9 postcode, which includes Interestingly, prime transactional Donaldson’s and Westerlea Gardens. the Quartermile development, and the growth across the Lothians was Meanwhile, prime activity in Trinity, EH10 6 area covering Fairmilehead. limited to £700,000, with a drop in Inverleith and Stockbridge increased Meanwhile, the new build market activity above this level. As a result, the from 144 in 2017 to 182 in 2018. supported transactional growth in average prime transaction price above The central hotspots of the New Currie, Gilmerton and Liberton. The new £400,000 fell by 8%, from £564,811 in Town and West End remained stable build market in Leith also stimulated the 2017 to £519,903 in 2018. last year. Despite an increase in second local second hand market. Whereas activity above £700,000 hand activity, there were fewer new during 2017 across the Lothians was build transactions due to a number of The Lothians widespread, most of the transactions sites reaching completion, resulting in a The overall number of transactions in the in 2018 took place in the East Lothian slight drop in overall prime activity. surrounding Lothians area fell slightly hotspots of North Berwick and Gullane. Prime transactions at £400,000 and above The market continues to grow across Edinburgh’s inner suburbs ■ 2016 ■ 2017 ■ 2018 450 400 399 378 350 343 300 250 200 159 159 155 150 149 129 £400,000 and above £400,000 100 85 86 67 64 66 58 55 60 59 53 54 51 60 59 50 44 51 45 49 49 52 Number of residential transactions at at transactions Number of residential 42 40 0 Grange, New Town West End Ravelston Murrayfield Trinity Inverleith Stockbridge Barnton & Colinton Morningside Cramond & Merchiston Source Savills Research 3 Greater Glasgow Prices in Greater Glasgow grew annually by 5% during 2018 Lack of supply supporting price growth Demand will continue, bolstered by a growing economy Greater Glasgow includes the city food, sport and education offering Market exceptions area of Glasgow and commuter/ confirms the city’s reputation as a highly Whilst the overall market lacked suburban areas across neighbouring desirable international destination. transactional growth, some price bands Dunbartonshire, Lanarkshire and Despite growing demand, housing bucked the trend. The market above Renfrewshire. supply is intermittent. Current availability £800,000 saw a remarkable performance, Glasgow has experienced economic is 8% lower than last year, which explains with 89 transactions in 2018 compared to growth and development in recent the lack of movement in transactions 71 in 2017. This figure was the highest since years, bolstered by a growing and young between 2017 and 2018. Meanwhile, 2008. The majority took place in Glasgow’s population, and business growth in high- average monthly house prices in Greater West End and Park and also Pollokshields tech and service sectors. Glasgow grew annually by 5% during 2018. and Newlands in the southside. These are exciting times for the city, Moreover, the Savills Prime Index for Activity above £800,000 also increased where Barclays have broken ground the city area of Glasgow increased by 3% in the suburbs of Bearsden, Milngavie, on the new Buchanan Wharf campus during the final quarter of 2018 compared Bothwell and Thorntonhall. However, development on the Clyde, which will to 2017. high-end transaction numbers remained house their technology, functions and As we enter the spring market, unchanged in the suburbs of Giffnock operations team. Once completed, the we anticipate more stock coming on and Newton Mearns. Meanwhile, more campus will accommodate up to 2,500 the market. But a significant spike attainable new build supply boosted the additional staff. in applicants and viewing activity markets between £200,000 and £400,000 Glasgow is the largest retail centre in will continue to put upward pressure in the commuter locations of Lanarkshire the UK outside London and its music, on values. and Renfrewshire. Greater Glasgow market above £800,000 As the wider market remains stable, high-end transactions have increased 120 105 100 89 80 71 64 62 60 54 48 52 43 39 43 and above 40 20 Number of residential Number of residential transactions at £800,000 at transactions 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source Savills Research Country locations are climbing up Prime transactional performance is now exceeding city locations, driven by realistic pricing Country locations of Scotland include Scotland’s heartland is now the third of Fife as a whole grew from 36% in the heartland of Fife, Perthshire and largest prime market outside Edinburgh 2017 to 45% in 2018. Other notable Stirlingshire, as well as the Highlands, and Greater Glasgow.