Prime property prices in Edinburgh rising at fastest rate for a decade

Property prices in Edinburgh’s prime property market increased by 3.3% between January and March, taking annual growth to 7.7%, the latest analysis report shows. According to the report from real estate firm Knight Frank price growth has been driven by a pick-up in activity across the city, particularly within higher price brackets. It is the fastest growth rate since the index began a decade ago. Indeed, in the above £1 million sector there was a 16% increase in sales in 2017 compared with the previous year and Edinburgh accounted for 65% of £1 million plus sales in Scotland. However, the report points out that supply remains tight with 40% fewer prime properties worth £500,000 or more offered for sale so far this year compared to the same period in 2016 and this could weigh on 2018 transaction levels but should underpin values. Transactions in the city also increased, up by 2% last year, according to data from the Registers of Scotland. However, stronger growth in sales volumes was seen in higher price brackets during 2017, with a 16% year on year increase in property sales between £500,000 and £1 million, and sales above £1 million. According to Oliver Knight it follows a period of more subdued activity in the prime market after the introduction of the Land and Building Transaction Tax (LBTT) in 2015. ‘While activity was concentrated on central areas in 2017, it has started to ripple out to more suburban areas, particularly towards the west and south of the city, driven by the market for larger family houses in areas such as Murrayfield and Morningside,’ he said. He pointed out that Knight Frank data covering the first three months of 2018 suggest that momentum has continued this year. ‘Demand remains strong, with current selling times averaging around seven weeks across all price bands, compared with more than eight weeks at the same point in 2017,’ he added. Looking ahead, despite the positive sentiment surrounding the Edinburgh market at present, a relative shortage of new homes coming onto the market could also weigh on transaction volumes this year, he also pointed out. An analysis of listings data shows there have been 40% fewer properties worth £500,000 or more put up for sale so far in 2018 compared with the same period in 2017. Edinburgh now accounts for 65% of the sale market of property selling for £1 million or more, up from 55% the previous year, the index data also shows. Activity in this sector was concentrated in the city centre with EH3 accounting for nearly a quarter of sales, followed by EH4 and EH10.