By Liz Lucking | Mansion Global
With a 10.6% annual increase in prime real estate prices, it is now one of the best performing markets in Europe
Prime property price growth in the Scottish capital of Edinburgh hit its highest level in more than a decade in the past year, propelled by strong activity in the million-pound-plus market, according to a fourth quarter report Wednesday from Knight Frank.
Annual prime price growth in Edinburgh was 10.6% in 2018, making it one of the best performing prime markets in Europe, according to the estate agent and property consultant. Knight Frank did not specify what the average prime property price now stands at.
Properties valued above £2 million (US$2.53 million) recorded the strongest growth in the fourth quarter, with values up an average of 3.5%, while homes valued between £500,000 and £1 million rose 1% during the same period.
Driving the price gains is an increase in activity levels.
Sales volumes above £1 million this year are 12% higher than in 2017, suggesting that "Edinburgh has been less affected by the political uncertainty impacting other prime markets in the U.K.," said Oliver Knight, residential research associate at Knight Frank, in the report.
"No market likes uncertainty though and, in recent months, as the planned date for the U.K.’s withdrawal from the European Union nears activity in prime markets has started to moderate, which could weigh on transaction volumes in early 2019," he said.
A further spike in activity could come as buyers rush to beat the introduction of an additional Land and Buildings Transaction Tax (LBTT) rate for second home purchasers and buy-to-let investors in Scotland, Knight Frank said. The policy, which will see taxes increase 3% to 4% of the total purchase price, will begin in late January.
Further underpinning the market is the release of pent-up demand following a prolonged period of subdued performance. During the period between 2010 and 2018, annual price growth in Edinburgh averaged 1.4%, according to Knight Frank, as the market adjusted to changes to property taxation as well as political uncertainty, like 2014’s Scottish independence referendum and the introduction of the LBTT, which replaced stamp duty in Scotland in 2015.
The pick-up in demand also means properties are selling faster. Homes in the city sold 12.5% faster in 2018 than in 2016. In comparison, in areas like London, the East of England and the South East, properties are taking 30% longer to sell.