Land is undervalued and demand is growing in Scotland

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by Kay Murchie

For the last 5 years, property sales in Scotland have been on fire and show no signs of slowing. Scottish house price rises have outperformed the boom in London and only Northern Ireland has shown greater growth. Land is undervalued but demand is growing among local and foreign buyers.

Agents brag that properties priced between £2-3 million can be sold 10 times over. According to Savills, a property that sold for £2 million in 2004, is today worth £5 million.

Savills added that it is £2,500 an acre in Scotland compared to £3,000 in England and as high as £9,000 outside Dublin. You would pay the same for an acre in Scotland as a square foot in Kensington.

Foreigners and English people are attracted by cheaper college fees, cheaper broadband access and lower prescription charges.

However, there are only so many sought-after addresses and fewer that are available. In 2006, there just 3,319 residential sales over £400,000 and 164 over £1 million and numbers are thought to be rising.

These large properties are appealing as a medium-term investment. Capital appreciation for these kinds of properties has been considerable over the last 5 years so people tend not to sell them. However, when they do come up, the market is expected to be a strong one.

Prices in Scotland rose by 3% in July, according to Chesterton’s meta-index, which draws data from asking price indices, sales indices, mortgage applications and completion indices. Annual property inflation stands at 21.3%, higher than London.

Savills commented that Scottish Property is relatively cheap compared to the rest of Great Britain. There has been strong house price growth across the Edinburgh and Glasgow commuter zones.