Prices and sales in the Scottish prime country house market saw growth in 2018
Activity in the prime country house market in Scotland was relatively constant during 2018 with the sector seeing a modest increase in prices and sales also rising, a new analysis shows.
Overall prices for prime property in Scotland increased by 0.4% year between October and December, the sixth quarter in a row of growth, according to the latest Scottish country house index from real estate firm Knight Frank.
On an annual basis, values ended the year 2.3% higher but despite this period of sustained growth, prices are still around 20% below their pre-crash peak levels and the firm’s agents point out that this means that many country locations currently offer relative value for money, especially when compared with prime markets elsewhere in the UK.
This has helped underpin demand, which has stayed relatively constant amid a more uncertain political backdrop as the UK’s European Union departure nears. Indeed, across Scotland, the number of sales of homes valued above £500,000 increased by 2% during the 12 months to September 2018 compared with a year earlier and was 20% higher than in the same period to September 2016.
Meanwhile, the number of transactions above £1 million was 3.3% higher year on year and the report points out that while much of the increase over the past two years can be accounted for by a rise in transactions in urban locations, there has also been a pick-up in activity in rural markets within commuting distance of city hubs including in the Scottish Borders and the Lothians.
However, a slowdown in the number of homes being listed for sale at the top end of the market, exacerbated by the political situation, could cause activity levels to slow in early 2019, it warns.
There is also the prospect of an increase in tax for buy to let investors and second home buyers after the Scottish Government announced plans to raise the additional tax levied on these purchases from 3% to 4% of the purchase price.
The proposal, which will be effective from the 25th January 2019 if approved by the Scottish Parliament, is the latest in a long line of tax changes introduced in Scotland. It will see the tax bill for a second home purchaser buying a £500,000 property rise from £38,350 to £43,350. As has been the case with previous pre-announced tax increases, we may see a modest spike in activity ahead of its introduction.
‘Against the backdrop of Brexit negotiations, it is likely that current market conditions will continue in the short-term with pricing expected to remain subdued,’ said Oliver Knight, Knight Frank residential research associate.
‘However, the relative value on offer across prime markets in Scotland should underpin demand. Our forecast for prime regional housing markets across the UK is for 0.5% growth in 2019 and cumulative growth of 8.2% between 2019 and 2023,’ he added.