SAVILLS’ latest analysis of UK residential market performance during 2023 shows that while mortgage affordability has impacted the wider sector, Scotland’s prime market has been the most resilient in the UK with a 1% increase in net agreed sales.
This compares to a -17% drop in prime UK regional markets outside London. The prime market typically comprises properties in the top 5-10% house price and is less reliant on mortgage lending.
The report highlights varying levels of performance within Scotland’s prime transactions. Whilst the number of transactions have increased, prices have seen a slight drop.
Faisal Choudhry, head of residential research at Savills in Scotland, said, “There was a slowdown in discretionary lifestyle markets, and also within price bands that are more exposed to affordability pressures. Transactional activity was facilitated by an 84% rise in properties undergoing an asking price adjustment last year.”
Cameron Ewer, head of Savills Scotland residential sales, added, “More available stock in some areas has reduced competitive bidding amongst buyers, but prices remained firm in most locations due to a lack of high quality stock being launched on the market, especially in Glasgow City and Scotland’s commutable country locations. We anticipate prime values will remain relatively robust in 2024, with healthy levels of buyer demand and a constrained supply of well-presented properties in many areas. But pressure on pricing will continue with more stock coming to the market.
“Properties are taking longer to sell compared to 2022, and so aligning expectations will be key to enabling transactional activity in 2024, especially in areas where there is a wider choice of available properties.”
According to the report, prices in the prime Scotland market are expected to fall by -1% over the course of 2024. However, a ‘significant’ improvement in prime market conditions is anticipated in the medium term.
Faisal added, “Price growth is expected to return in 2025 once economic conditions stabilise. A Bank of England base rate cut, followed by a more substantial decline in mortgage rates, would lead to increased certainty and greater buyer confidence. Prime Scotland price growth is expected to be about 21% in the five years to 2028, outperforming the UK regional average of 18.6%.
“Scotland continues to fare comparatively well due to relative value for money, the strength and depth of the economies of Edinburgh and Glasgow and the quality of life on offer north of the border.”
