The annual Strutt & Parker Scottish Land and Property Seminar took place today with experts looking back at the market during 2015 and making predictions for this year.
The annual Strutt & Parker Scottish Land and Property Seminar took place today with experts looking back at the market during 2015 and making predictions for this year.
Blair Stewart, Head of Edinburgh Residential Sales, said that the demand for Core (£300-500K) and New Home properties in central Edinburgh is continuing to outstrip supply and this sector of the market is “on fire”. The past year has seen monthly highs of 303 sales in February and 294 in December. He said: “I consider that a 10% growth in the £350-500K market and a 5% growth in the £500-750K market is realistic, even with the additional 3% LBTT surcharge due on the 1st April.”
Commenting on the Prime market (£750k to £1 million) he said: “I feel this sector will be more exposed to the higher LBTT surcharge rate and such growth more muted to 1% in prime central locations”, and on the Super prime market (£1m+) he said “with the Scottish Parliament elections on May 5 2016, continuing wrangling between SNP and the UK government over independence and Scotland’s economic future I think that this end of the market will be more turbulent with prime New Town and The Grange values holding firm but further outlying areas exposed to buyers nervousness to commit; hence growth of 0%.”
Malcolm Leslie, Head of the Country House Department, discussed trends and predictions for his core market (from North Perthshire to Borders on east of the country and across to Dumfries-shire on south of Scotland). “Last year I predicted an increase in transaction numbers in the run up to the introduction of LBTT: indeed for houses between £300,000 and £750,000 there was a 74% increase in activity during March and April compared to 2014, the £750,000-£1m market saw a 2 ½ fold increase and the number of transactions in excess of £1million increased four fold. There was exceptional activity from mid-April until end of June with some of the best trading conditions that we have experienced since 2008.
“In the Super Prime market (properties for over £1m) it has been less resilient since the introduction of LBTT. The bulk of sales over £1m since April last year are within easy commuting distance of Edinburgh and bought by those who have to be based in the city. Lifestyle properties further afield were much harder to sell. We have a number of challenges ahead of us this year with Holyrood elections, the 3% LBTT surcharge for buy to let properties and second homes and the European Referendum on June 23 but we anticipate that the market will continue to adapt and adjust and that improved transaction numbers will filter up the market.”
Robert McCulloch, Partner in the Estates and Farms Department gave his views on this sector of the market.
He said “Last year the number of estate transactions in Scotland increased by 150% from 7 sales in 2014 to 19 in 2015 with the total sum of money spent in this sector increasing by 82% from under £34m in 2014 to over £65m in 2015. Of the purchasers 44% were from overseas which underlines the enduring worldwide appeal of Scottish estates.
“So, with the number of sales and total sum of money spent having significantly improved during 2015, this market is very clearly open for business in early 2016. Whilst this is of course a welcome state of affairs for the likes of my team, and for those solicitors amongst you involved in transactional work, it would be misleading of me to suggest that buyers in 2016 have nothing to concern themselves with.
“There remain a number of key considerations which the buyers of estates are advised to educate themselves on before committing themselves to a purchase. One subject for concern is Land Reform, although I feel that the perception of Land Reform is more of a blemish on this market than the reality of the measures that look likely to be introduced. For the majority of estate buyers I think the reintroduction of sporting rates will be seen more as a minor inconvenience than a reason to avoid buying an estate. In the scheme of the overall cost of annual cap-ex and management that buyers expect, it is not likely to impact significantly on the performance of the market.
“In the farmland market there was a reduction of 24% in the number of sales and a 15% reduction in the total sum spent on farms which dropped from £97m to £82m. There continues to be great disparity in land values regionally – an acre of arable land in Angus is worth twice that of similar land in the south west.
“The uncertainty caused by both CAP Reform and volatile product prices are balanced by the low cost of borrowing, which farmers are not slow to recognise. The reliefs from Capital Taxation particularly in relation to Capital Gains and Inheritance Tax have long been a key factor in this sector and will remain so for as long as these reliefs exist.”
Andrew Rettie, chairman of Strutt & Parker in Scotland, said: “The business community across Scotland will have to embrace a Scottish election on May 5 followed by a European Referendum seven weeks later on June 23. Markets don’t like uncertainties and each of our speakers today gave clear, realistic and sensible opinion with their predictions for 2016.
“My own view is that the first half of 2016 will witness a low volume of trade in our markets and the second half will see volume picking up as the business community reacts to the two main votes in the summer.”