Prime Edinburgh property market reports double-digit growth in 2018
Robust activity levels, particularly in the million-pound plus market, underpinned strong price growth in 2018.
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Annual price growth for prime property in Edinburgh reached its highest level in more than a decade in 2018, with values rising by 10.6%, according to Knight Frank data.
Across Scotland, values for prime country houses rose by 2.3% annually.
One of the key factors underpinning recent strong performance in Edinburgh has been the increase in activity levels seen over the past 18 months. Official data shows that sales volumes above £1 million in 2018 are currently running 12% higher than at the same point in 2017.
Volumes between £500,000 and £1 million have also been robust, though in recent months they have slowed slightly in a sign that recent political uncertainty is starting to weigh on volumes.
The prime market has been underpinned, in part, by a release of pent-up demand following a prolonged period of fairly subdued performance as the market adjusted to changes to property taxation as well as political uncertainty. During the period between 2010 and 2018, for example, annual price growth in Edinburgh averaged just 1.4%, according to our index.
TAX
News that the Scottish government plans to increase the additional LBTT rate for second home purchasers and buy-to-let investors from 3% to 4% of the total purchase price, could weigh on sentiment and demand in 2019 with property taxes in Scotland already higher than across the rest of England and Wales. As has been the case with previous pre-announced tax increases, we may see a modest spike in activity ahead of its introduction in late January.
OUTLOOK
Thus far, the prime property market in Edinburgh appears less affected by the political pressures which have been weighing on prime markets across the rest of the UK. No market likes uncertainty however, and it’s not inconceivable that some buyers and vendors, especially discretionary ones, choosing to sit tight as the planned date for the UK’s withdrawal from the European Union nears. This could weigh on transaction volumes.
Our forecast for prime regional housing markets across the UK is for just 0.5% growth in 2019 and cumulative growth of 8.2% between 2019 and 2023, though we expect Edinburgh will continue to outperform this.