The top end of the Edinburgh property market stirs into life but ennui remains the norm
There is an element of stasis in the Edinburgh residential property market at the moment; a sense of lives continuing to be put on hold until some semblance of normality returns to events beyond the Pentland Hills.
There is no question that Brexit uncertainty is above all the other uncertainties at the root of market inactivity.
The number of properties coming on to the market remains markedly and stubbornly thin and the lack of supply which has dogged the last few years shows little current sign of easing.
However, agents are reporting an increase in activity at the top end of the market, that is homes in the £1 million-plus bracket. There have also been a number of significant off-market deals in the last couple of weeks.
Why should this be the case? It is hard to pin down a specific catalyst, but perhaps it is as simple as the fact that buyers and sellers in this segment have more options than mainstream participants and are less beholden to outside influences.
The trickle of property below this level that is making its way on to the agents’ books is, as would be expected, moving briskly and selling in excess of Home Report valuations.
The amount of premium that sellers can expect in this unusual situation varies widely, from 5% to more than 20%. It is not as steady or predictable as late autumn last year when premiums well north of 10% were a regular feature.
As in recent years, this pressure on pricing is being driven largely by unsuccessful buyers who have been outbid, often more than once, and are putting in offers fuelled more by determination than by rational appraisal.
So, values are increasing while other, non-Brexit, economic forecasts are improving. The initial hit the market suffered from the introduction of new LBTT bandings has now largely been factored in and is no longer a significant hindrance to activity.
The last few quarters have also seen a marked increase in the number of landlords exiting the Buy-to-Let arena. This is understandable given the latest fiscal and regulatory demands made on the sector, but it has not yet turned into a flood.
The city centre remains the most irresistible lure for buyers, though other hotspots such as Stockbridge, Broughton, Belleview and Bruntsfield will always have their aficionados.
With demand so strong in the centre, it is unsurprising that districts such as Dalry and Haymarket are attracting attention, as are Leith Walk and all the way into Leith itself. Overall, demand is high in most areas.
Developers are breaking ground in a number of new-build sites, most notably Cala’s green-belt activity at Balerno. As predicted in this space previously, builders are plundering their land banks to take positive advantage of the shortage of supply.
They are as aware as anyone of the lack of second-hand properties and they are very successfully positioning themselves with part exchange deals as a safe option, assuring sellers that they will have a willing buyer.
There is unlikely to be a great change in the market until external circumstances settle down, and a crystal ball would be a useful accessory for determining just when that might happen.
Nick Hancock a Director at the Edinburgh offices of DM Hall, one of Scotland’s leading firms of Chartered Surveyors.