Property price growth in Edinburgh was higher than any other city in the UK last year with a rise of 10.2% in the 12 months to December 2017, new research shows.
Average prices in the city reached a record high of £285,000 and the total value of Edinburgh’s housing stock grew by £7.5 billion from £61.4 billion in 2016 to £68.9 billion last year, more than any other local authority district in the UK as a whole.
Overall Scotland has seen its strongest housing market since 2007, with price growth now outperforming London and values are expected to continue to rise due to a lack of supply, according to the latest research report from Savills.
‘Edinburgh’s residential market profile continues to excel. The lack of supply and strong domestic and international demand for property in the capital is one of the main reasons behind a rise in prime values in Edinburgh,’ said Faisal Choudhry, Savills head of Residential research in Scotland.
The data also shows that sales of prime property above £400,000 in Edinburgh reached a record 1,733 during 2017, which was 15% higher than 2016. Transactions above £750,000 increased from 247 in 2016 to 274 in 2017.
The southern Edinburgh hotspots of Grange, Morningside and Merchiston accounted for the largest proportion of prime activity, with a total of 377 transactions last year, overtaking the traditional million pound hub of the New Town.
Ben Fox, head of Savills Edinburgh Residential, pointed out that the number of prime second-hand properties launched on to the market in Edinburgh’s New Town fell by 33% last year, compared to 2016.
‘LBTT is still affecting supply issues here, and the lack of choice has resulted in a vicious circle, as potential sellers delay launching to the market until a suitable property is available,’ he said.
The number of new build transactions in Edinburgh increased by 30% last year. Some of the highest sales volumes took place in the suburban locations of Liberton and South Queensferry.
However, the strongest growth in transactions last year was witnessed closer to the city centre. The redevelopment of Edinburgh St James at the eastern edge of Princes Street is encouraging a gravitation towards the east of the city centre.
Indeed, the highest number of new build transactions took place in eastern locations of the city around McDonald Road and Leith Walk. Looking ahead, value growth across Edinburgh will continue, with some new build properties, at developments such as Donaldson’s, beginning to exceed £700 per square foot.
‘There is a real sense of confidence in the Scottish market at present. While we are seeing an uplift in domestic wealth, the million pound market has been fuelled by buyers from outside Scotland and across the globe, with those buyers attracted by the comparative good value for money and quality of life,’ Choudhry.
The proportion of million pound transactions is becoming increasingly concentrated in Edinburgh, reaching 62% in 2017 compared to a 10 year average of 49%. There were 108 million pound transactions in Edinburgh during 2017, which is the highest annual figure since 2007.
East Lothian has moved up to second place in the million pound sales league table, overtaking both Glasgow and Aberdeen. There were 10 million pound transactions in East Lothian, concentrated in Inveresk, North Berwick and Archerfield.
Midlothian recorded its first million transactions in three years, with two taking place in Eskbank and Lasswade. West Lothian also saw its first million pound activity since 2015, with two transactions taking place in Linlithgow and West Calder.