·       In the face of the slow economic recovery and the recent turmoil of the financial markets investors are seeking alternative investment options.  Some are looking to property as a long term financial solution.

·      Despite the oversupply of property in many areas of the market there is still significant demand for good properties in the right areas.

Rural Property

·      According to recent figures released by the Bank of Scotland, average prices of properties in rural areas of Scotland have doubled over the past decade from £79,104 in 2001 to £158,923 in 2011.

·      This price rise of 101% has seen a faster increase than the UK as a whole where the average property price has increased by 54%.

·      Moray, Aberdeenshire, Highlands, Dumfries & Galloway and Perth & Kinross are the areas which have seen the biggest rise.

·      East Ayrshire is currently the rural local authority area with the lowest average property price at £103,981.

Farms and Estates

·      With 75% of Scotland’s land mass under agricultural production and 1 in 10 of Scottish Jobs being dependant on agriculture, interest in the Scottish Farms and Estates Market is understandable.

·      Land prices have been driven up, and maintained, by a 50% drop off in the supply of farmland since 2000, when the foot and mouth outbreak hit.

·      In 2010 Scottish Farmland prices rose by 6% to an average of more than £7000 per acre, although expectations are now closer to an average of £6000 per acre. (source: Savills)

·      This is still significantly lower than England which reached an average of £10,000 per acre in 2010, leading to an increase in buyers from south of the Border.

Edinburgh Property

·      The average house price in Edinburgh City of property in the range of £20,000 to £1,000,000 has increased by 47% since 2004.

·      Average house prices in the same range in Edinburgh City have fallen by 10% from their peak to date.

·      At the peak of the market there were 16,790 recorded transactions in Edinburgh City.  Last year this had fallen back to 7,711.

·      This year seems to be mirroring last year’s figures.

·      Edinburgh was the local authority area with the highest average sale price at £214.383, although Glasgow did marginally exceed Edinburgh in the number of sales transactions by just over 3%. (source: ROS)

·      Demand in Edinburgh is still evident with ESPC analysis reporting a single premier property on their website can expect to receive an average of 200 views per week. (source: ESPC)

·        The majority of Scottish business surveys have reported a pickup in activity throughout the first half of 2011 with the latest Bank of Scotland figures showing six consecutive months of expansion of private sector output.

·        Despite weakening more quickly than the rest of the UK as a whole at the start of the recession, Scotland’s unemployment rate is now slightly lower than the rest of the UK.  The Scottish Government reported that unemployment has fallen for seven consecutive months to April 2011.

·        As would be expected during the “recovery” stage of a recession Scottish GDP growth is likely to remain volatile for the foreseeable future.

     Scottish Property Market

·       Parts of the property market are showing positive signs with latest research revealing that the number of sales of properties costing £1m or more during the first six months of 2011 had increased by 30% over the same period in 2010. (source: Savills)

·       Although few of these properties are achieving what they would have at the peak of the market in 2007, most owners have been in their current homes prior to the house market fall and are still realising significant levels of equity.

·       Cash is a key driver in the market in the face of “restricted” bank lending.

·      The beginning of January until the end of August 2011 saw 215 properties (totalling £346m) come onto the open market at an asking price of £1m or more, compared to 151 during the same period last year.  Over £100m of this was attributed to farms or estates.

·       Despite the influx of these higher valued properties coming to the market there remains a shortage of good quality properties in the most desirable areas.

·       Assuming interest rates remain where they are we would expect to see little change in property prices for the remainder of 2011.

     Farms and Estates (source: Smiths Gore)

·       The latest update to the European Common Agricultural Policy (CAP) reforms, released early September 2011, generally looks like more of the same.  Broadly, this is likely to be welcomed by farmers.

·       The key changes to the CAP are that direct payments are likely to continue although very likely to be lower and more “green” work will be required for payments.

·       A progressive capping of payments to “large farmers” is looking much more likely.

·       There still remains uncertainty over payments only to active farmers.

     Edinburgh

·       Edinburgh City Council has signed a new deal with its main Trams contractor, and work re-commenced on 17 September 2011 with a view to completion by summer 2014, at an estimated cost of £776m.

·       A recent proposal to transform part of Edinburgh’s Old Town has been launched.  The proposal which includes creation of both serviced and residential apartments, a restaurant and 585 sq/m of office space would redevelop buildings dating between 1588 and 1882 as well as utilising Warriston Close.

·      Following a review of their funding options, Lloyds Bank-controlled developer Gladedale is seeking a new owner for the Quartermile Development on the former Royal Infirmary site.

·       Edinburgh saw the greatest number of properties (30%) of £1m or more coming to the open market compared with all other areas in Scotland.

·       43% of these were in the New Town or Stockbridge with a total of only 6 properties, of £1m or more in the southside areas of the Grange, Morningside and Merchiston.

·       Demand for good properties in these areas is rising.

·       Although Edinburgh had the biggest proportion of £1m properties come to the market in Scotland, this was unchanged from the number that came on over the same period in 2010.

·       Press reports suggest confidence in the UK housing market is likely to remain subdued over the next few months as a result of the slow economic recovery.

·      The August Quarterly Inflation Report showed the Bank of England has cut expectations for GDP growth in 2011 from 1.8% to 1.4%.

·       Increasing gas and electricity prices could mean inflation, currently 4.4%, may hit 5% this autumn.

·       Expectations are that inflation would then fall back in 2013.

·       Banks are continuing to lend for house purchases however the mortgage market remains weak.

     Scottish Farms and Estates

·      There remains strong demand for good Scottish Farms and Estates, in particular those with sporting potential.

·       Between 1 January 2011 and 31 July 2011, 79 Farms and Estates came onto the Open Market with an asking price of £500,000 or more in Scotland.

·       These Farms and Estates included an average of 421.6 acres of land with an average asking price of £1,690,700.

·        Ayrshire saw the highest number of Farms and Estates to come onto the open market this year at 21%, followed by the Scottish Borders at 17%.

£1m Plus Scottish Properties

·       From the beginning of 2011 until 31^st July 2011 42% more properties with an asking price of £1m and over came to the Open Market compared with the same period last year.

·       As at 15 August 2011, 215 properties with an asking price of £1m and over were openly available.  The average asking price is £1,600,000.

·       The majority of these are located in East or Central Scotland.

Edinburgh Property

·        According to the ESPCs latest House Price Report house prices in most areas of East Central Scotland showed year-on-year falls of between 3% and 10%.

·       70% of properties advertised at a fixed price were sold for less than their asking price, up 17% from the same period last year.

·       10% of properties with an asking price of £500,000 or more within the Edinburgh area, which came to the market between 1 January 2011 and 31 July 2011, reduced their asking price within the same period.

·       The average asking price for properties over £500,000 in Edinburgh is currently £302/sqft (3,249/sqm).  Although several properties in particular in the New Town, Merchiston and Greenhill areas of Edinburgh are asking, and achieving, over £400/sqft (4,302/m2).

·       Edinburgh properties, over £500,000, were asking an average £349/sqft (3,755/sqm) the same time last year.

·       The average house price in the UK was 1.3% lower in April 2011 than a year ago.

·       In a report published at the end of May, the Centre for Economics and Business Research (CEBR) predicts, based on a key assumption that banks will ease their lending “restrictions”, house prices will continue falling for the remainder of 2011 but then it expects them to rise by an annual rate of 4% over the four years to 2015.

·       The Institute for Public Policy Research (IPPR) published a briefing paper at the end of May looking at the role of housing in the UK Economy.

·       The paper looks at the four housing bubbles in the UK over the last 40 years and the contribution these have made to the country’s major economic and social problems.

·       The IPPR have found that the easy lending practices by UK banks prior to the onset of the credit crunch have left UK households with bigger mortgages, relative to their income, than in any other major economy.

·       The UK has the highest levels of mortgage lending as a percentage of GDP at 81%, higher than the US, Canada and Western Europe, which are 73%, 49% and 44% respectively.

·       The IPPR have said there are two fundamental issues needed to be addressed to prevent another housing bubble in the future, firstly, an increase in supply of housing and more importantly looking to the government and the Bank of England to take necessary measures in the future to target fast rising house prices, something they have failed to do in the past.

·       The IPPR believe there is a strong case for fundamental reform of the taxation of housing in the UK which it states are low compared to other advanced economies.

          World Grain Prices

·       According to the UN’s Food and Agriculture Organisation the global price of cereals increased by 71%, over the last financial year.

·       A ban on grain exports placed in August 2010 by Russia, together with the affect of drought and floods in the UK, Europe and North America, have caused this significant price increase which has meant a standard loaf of white bread has risen by 11.7% in the UK in the last year.

·       It is anticipated, according to the global experts in grain production, Arvalis, that between 10 and 15% of the UK grain harvest could fail this autumn.

·       Following worries that rising cereal prices, which are now three times higher than they were a decade ago, could lead to food shortages and political unrest, the Russian Prime Minister has recently agreed to lift the export ban from Russia with effect from ^1st July 2011.

·       Additional supplies of grain from Russia and the Ukraine are likely to take upward pressure off wheat prices.

          Scottish Farmland

·       Prices of Scottish Farmland are currently lower than in England with grade 3 arable land in England costing an average of £5,700/acre, a rise of 2.7% during the first quarter of this year, whereas grade 3 arable land in Scotland remained unchanged over the same period, at an average of just over £4,000/acre.

·       A recent report by UK estate agency Smiths Gore suggests that Scottish Farmland will soon be as in demand as English Farmland which will lead to a rise in Scottish land prices in the next 12 months.

·       It is believed that both farmers and investors will seek to buy farmland in Scotland.

          Scottish Country House Market

·       The traditional spring/summer market for country houses is now under way, held up by the poor May weather.

·       As predicted not everything is coming onto the open market, with much being offered privately. There remains a significant inventory of property unsold from previous years.

·       It is very noticeable that we are seeing some large and important properties being made available in the market, both in terms of Estates and Houses. Some have rarely been on the market; others are coming back in a relatively short time frame.

·       There is a reasonable spread of availability but we have seen an upturn in availability in key areas such as East Lothian and Aberdeenshire.

          Edinburgh Property

·       Six out of ten of the most expensive properties bought in Scotland over the last five years have been in Edinburgh, according to recent figures released by the Registers of Scotland. (RoS)

·       The other four properties in the top ten most expensive in Scotland List were; two in Auchterarder, one in St Andrews and one in Longniddry, in East Lothian.

·       Surprisingly no Glasgow properties made it into the top ten, falling short of this list by almost £1 million.

·      A slow start to the year has prompted recent news headlines warning of house price falls to come within the UK, and specifically Scottish, property markets.

·      Land Registry figures showed that the average property fell in March 2011, by 1.1%, leaving property prices 2.3% lower than a year ago.

·      The Registers of Scotland (RoS) Data shows property sales down by 35% in the first quarter of 2011 compared to the last quarter of 2010.

·      Last month Scotland has seen a significant pick up in buyer activity, frustrated by the slower than anticipated pick up in seller activity.

·      The Bank of England however announced that the number of house purchase approved loans had increased in March, making it the highest number in five months but at the same time new mortgage lending fell to £374m in March down from £950m in February and £1.71 billion in January.

·      Should we be surprised? – No!

·      The number of cash purchases has been also been rising.  Recent reports show that these have been rising sharply since 2005.

·      Figures suggest that 40% of property purchases are made in cash, without the need for a mortgage or loan.  This has more than doubled since 2005 when cash purchases only made up 15%.

·      In certain regions of the UK the percentage of cash buyers is even higher, with south-west of England estimated at 55% and London believed to be as high as 80% of buyers paying in cash.

·      This confirms what we at Saint Property are seeing in Scotland.  Out of the £45m available to spend by our clients on rural properties, 92% is in cash.  In Edinburgh, out of the £12.75m available to spend by our clients, 91% is in cash.

·      A large proportion of these cash purchases are being seen at the top end of the property market. We are seeing a surge in demand for Estates, Country Houses and Edinburgh family houses.

·      Although there are concerns that these cash buyers will heighten the already developing divide between the top and bottom ends of the property market, this injection of cash must be seen as positive not only for the property market, but also for the wider economy.

·      Much of this cash is coming from outwith Scotland. Saint Property have seen increased interest in Scottish property from cash buyers from both the UK and oversees.

Million-Pound Properties

·      Sales of properties, with an asking price of £1m or more in the UK, increased at the fastest rate for four years according to recent data released by Lloyds TSB.

·      7,185 of these £1m properties were sold in the UK last year, which was a 54% increase from 2009.

·      This increase in top end UK property sales is disproportionate from the rest of the property market which saw property sales only increase by 9% since 2009.

·      In the first quarter of 2011 we have seen an increase of 28% in the number of properties in Edinburgh coming to the open market, with an asking price of £1m or more, from the first quarter of 2010.  The average asking price for these Edinburgh properties has also increased in the period, from £1,257,390 to £1,479,074. (source Saint Property data)

·      Scottish rural properties with an asking price of £1m or more coming to the open market during the first quarter of 2011 shows a similar trend to the first quarter of 2010, with a total asking price of £45,485,000.  Only an increase of 4%.

·      It should be noted that several other properties have also become available privately during the period.

Edinburgh Property

·      Saint Property figures show that 11% more new properties in Edinburgh came to the open market during the first quarter of 2011, than the first quarter of 2010, with an asking price of £500,000 or more.

·      The area which saw the largest number of new properties come to the open market was Edinburgh’s New Town area which had 18% of the total, followed by Morningside and Colinton which both had 8% of the total number of new properties.

·      Property owners in Edinburgh have seen high increases in the cost of their home insurance which has risen 45% since February 2010. (moneysupermarket.com)  This is significantly higher than the average 6% increase across the UK as a whole.  This appears to be as a result of insurers increasing premiums in affluent areas. 

·        There were no real surprises in the 2011 Budget although the Chancellor did try to lesson the impact of the tax and child benefit changes, announced in last June’s Emergency Budget, which are due to come into effect on 6 April.

·        On the whole, the Budget was looking a year ahead but the next 12 months are going to be tough.

·        Rising inflation coupled with stagnant wage growth is putting further pressure on households’ disposable incomes which have suffered their first annual fall in 2010 since 1981, according to the Office for National Statistics. (ONS)

·        The ONS reported, per head real income dropped from £14,181 in 2009 to £13,980 in 2010.

·        RBS’ Chief Executive, Stephen Hester, predicts two interest rate rises in the UK by the end of this financial year.

·        Although a rise in interest rates could put further pressure on house prices, it may be the trigger for undecided sellers to put their property onto the market.

Budget Impact on Property

·        The Government will provide £250m in loans to support first-time buyers in purchasing new-build properties.  These loans will be jointly funded by the government and house builders.  The purchaser will have to provide a 5% deposit.

·        To encourage investment in residential property and promote the supply of private rented housing, the Government will use the Finance Bill 2011 to introduce legislation that provides stamp duty land tax (SDLT) relief for residential property purchasers who acquire interests in more than one dwelling from the same seller.

·        SDLT and stamp duty relief for land transactions in disadvantaged areas will be abolished after 2012.

·        The Government will announce the outcome of its review of first-time buyer SDLT in autumn 2011.  Currently, first-time buyers can claim a relief from SDLT if the amount they paid for the residential property does not exceed £250,000.

·        The Support for Mortgage Interest (SMI) scheme, due to end in January 2012, will be extended until January 2013.  SMI is currently available after 13 weeks at 100% of eligible mortgage interest on mortgages of up to £200,000. 

Wildlife Estates Scotland (WES)

·        An initiative has been developed by SBPBA and SEBG to offer estates and landowners in Scotland the opportunity to sign up to voluntary commitments on the conservation of Scotland’s habitat and wildlife, delivered through sustainable sporting management.

·        Scottish Natural Heritage, the Game and Wildlife Conservation Trust and the Cairngorms National Park Authority have played a supporting role in developing the scheme which is hoped will be seen as a key benchmark in land management best practice.

·        The scheme will be piloted by three estates, all within the Cairngorms National Park.  More than 200 other estates have already signed up to be included in the final scheme.  

·         Rural Scotland is now recognised as providing some of the best country sporting in the world.

Property Tax

·       There is no doubt that the coalition government is looking to review the way that property in the UK is taxed.

·        Business secretary, Vince Cable, still appears to be in favour of a tax on higher end property values although this could result in a distortion on house prices at the margin as people attempt to avoid reaching the threshold.

·        Another difficulty would be establishing the measure for tax authorities to use.

·       The government has said that any review would certainly include looking at Council Tax and Stamp Duty, however, this review should also look at those within the top rate tax bracket compared to those owning the larger valued properties as there should not be an assumption that they are one and the same.

About Saint Property

Saint Property Search represents individual buyers in their property purchase offering impartial and balanced advice.

            For further information, please contact us on +44 (131) 478 4533.

·       The Published House Price Market indices continue to give mixed messages, primarily as a result of the variations in the data used.

·       As predicted we have seen a surge of activity in the first two months of 2011.

·       New stock is now coming  through, particularly in Edinburgh, and early indicators show that the Country House Market will show a significant increase in supply in 2011.

·       The Land and Estates Market is showing significantly more supply in the first quarter than previous years.  Traditionally these properties have not shown themselves until Q2/Q3.

·       The Private Sale/Purchase will have an increased Market Share in 2011.

·       Inflation continues to rise, principally driven by higher fuel and food prices.  January’s increase in VAT hasn’t come through the system as yet.

·       Bank of England has kept base rates at 0.5% but faces the dilemma of whether to increase rates or maintain the present rate.  An increase in rates could pressurise any economic recovery.

·       Psychologically even a small increase in interest rates may move those sellers sitting on the fence to come forward into the market.

·       According to e.surv, the UK’s biggest distributor and manager of valuation instructions, the average loan-to-value (LTV) hit a two year high in December, but at 58.9% is still well below the peak of more than 69% in 2006.

·       Its data shows there is a big difference in the generosity of lenders towards those who are buying bigger value homes and those at the cheaper end of the housing market.  Those buying homes valued at more than £500,000 have seen LTVs increase by up to 14% since the market troughed in December 2008.  They can borrow virtually the same amount they could before the start of the house price crunch in the summer of 2007.

·       In contrast, people buying homes worth up to £125,000 have seen LTVs increase by just 6%, and the proportion they can borrow is still 9% less than it was before 2007.

·       As we look forward to 2011, there is no doubt that the Scottish Property Market will face its challenges, however, we feel it will be an exciting year, full of opportunities for the committed buyer.  These opportunities are there now if you know where to look…..

Environmental

·       As a reflection on Scotland’s vast resources for offshore renewables, Spanish wind energy developer Gamesa plans to invest 50 million euros in Scotland starting with a technology centre in Glasgow.  The company wants to be closely involved with the development of the UK’s offshore wind farms.

·       Gamesa is now the leading wind energy developer in Spain with 50% of the market share.

·       The Government will review the Feed In Tariff (FIT) Scheme for small scale low carbon electricity (up to 5 mw).

·       Consideration will be given to all Tariff levels.

·       Expect support to be reduced, however tariffs will remain unchanged until 2012.  Changes will effect new entrants not existing ones.

·       A Scottish Natural Heritage (SNH) recent report concluded that the proportion of Scottish land which could be counted as being “without visual influence of built development” fell from 31% to 28%.  This is principally a result of wind farms and powerlines.

Edinburgh Property

·       A city with a living past, exceptional job amenities and a cultured, contemporary world view continue to make Edinburgh one of the most sought after cities in the UK to live.

·       Figures released on 1^st February 2011 from the Registers of Scotland (RoS), however, show that Edinburgh was overtaken by East Dunbartonshire (which includes the affluent Glasgow suburbs of Bearsden, Milngavie, Lenzie and Bishopbriggs) as the local authority area with the highest average price.

·      The average price of a property in East Dunbartonshire now stands at £216,644, a rise of 10.5%, compared with the same time last year.  Edinburgh recorded an average price of £216,597, an average increase of 3.9% over the year.

·       Edinburgh properties remain in demand, in particular, those in the New Town, the Grange and Morningside and these were generally achieving good prices in 2010.

Stamp Duty land Tax (SDLT)

·       Remember the new SDLT top rate threshold is introduced on 6 April 2011.  SDLT rises from 4% - 5% on property purchased for more than £1m.

The inherited Government Deficit meant that the Emergency Budget on 22 June 2010 increased VAT to 20pc from 17.5pc to take effect from 4th January 2011 and increased Capital Gains Tax (CGT) for higher-rate taxpayers to 28pc (to remain at 18pc for basic-rate taxpayers).   The CGT exempt amount remained the same at £10,100 for this year, higher rate income tax rate was frozen until 2013/14 and personal income tax allowance increased by £1,000 in April to £7,475.

Inflation in the UK has been running well above comparable rates in the United States and Europe over the past year.   Official figures released in December 2010, by the Bank of England, however, showed annual consumer price inflation (CPI) rose to 3.3pc in November, more than a percentage point above the 2pc target in November.  Analysts had expected it to hold steady at 3.1pc.

According to the Department for Communities and Local Government’s (DCLG) monthly index house prices in the UK fell by 0.7% in the three months to September 2010, compared to a rise of 1.6% during the preceding three months of the year.  A 0.8% drop in September alone pushed the average cost of a UK home down to £211,815, just 6.1% up on a year ago.  In August, prices had been rising at an annual rate of 8.1%.

The DCLG figures support the picture of the UK property market gained from other surveys from lenders such as the Halifax and the Nationwide, and from the Royal Institute of Chartered Surveyors.

The Royal Institute of Chartered Surveyors (RICS) recorded a net balance of-4% in October 2010 compared with +22% in September 2010 reflecting the lack of mortgage finance available and cautious buyers indicating they may wait until the spring to make a decision.  The RICS had seen a rise previously, almost consistently, since July 2009, in the number of new instructions to the market in the UK.  In November 2010, 20% of (RICS) members reported prices fell rather than rose however the pace of decline was slower in Scotland than the rest of the UK.

A  gradual drying up of properties coming to the market should however limit any dramatic falls in house prices in the short term.

In East Central Scotland house prices continued to rise in Q3 of 2010, according to figures from the ESPC, this was the fourth consecutive quarter in which house prices had risen.  The type of property does however have an influence on this.   Our experience shows that the majority of transactions have been seen in the £500,000 to £1m price bracket, effectively pushing the average house price figures up.  In comparison there has been subdued activity in the first time buyer market and also at the top end.

2010 has been a strong year for buyers with a reasonable supply of properties coming to the market.   Although purchase activity in most regions in the UK is higher than a year ago Scotland has seen a 0.6% fall in the purchase rate from 30 September 2009 to 30 September 2010, according to the Nationwide UK House Price Index.  With supply and demand falling, transactional activity is likely to remain relatively flat until early 2011.

Scottish Property Market 2010

Research conducted by Saint Property in September 2010, revealed that there was an abundance of prime properties with an asking price of £1.5million or more in the Rural Market.  Asking prices totalled over £300 million, based on properties on the open market.

This was comprised of Houses 43%, Estates 39%, Farms 14%, Forest 2% and Rural Business 2%.

Analysis showed that the average asking price of property was £2.86m and the average time these properties had been on the market was 8 months.

Price amendments have been seen on some of these through the last Quarter of this year and these have been generally well received by the market with an increase in transactions.

In October 2010 the Bank of Scotland released the Million Pound Home Sales Report.  This looked at the Scottish Property Market for the first half of 2010 and specifically at property of £1m plus.  The headline was a 36% rise in Million Pound Home Sales in the first 6 months.

Put into context this accounted for 72 property sales out of an estimated 3,500 £1m plus properties in Scotland.  The same period in 2009 saw 53 sales.  However the 2010 figure was 20% down on the 2008 figure, following a 41% decline between the first halves of 2008 and 2009.

40% of these Scottish Sales were in Edinburgh. The Million Pound Sales continue to represent a tiny proportion of the total Market, accounting for 0.2% of all Scottish Sales.

The P:E ratio hovered around the 5.7 -6.5 mark however there were various reports putting it both significantly higher and lower than this spread.  The long term average P:E ratio sits around 3.5.

Rural Residential

As noted above the residential sector in Rural Scotland has accounted for the highest percentage of available property.  This sector has been very slow for the first three Quarters.

There have and remain buyers in this market but often these buyers are of a more discretionary nature and the decision to move, for example, from city to country is often being delayed.

It is apparent that the buyers looking at the Country House market are generally not willing to compromise and continue to be price sensitive.

The positive signs in the last Quarter of this year have stemmed from the increasing number of price amendments where a reduction in asking price has been seen.  This has generally generated fresh interest in a property and increased transactional activity in this last Quarter.  This approach we hope will be carried forward into 2011.

Farms and Estates

As is true in all types of property and land, the right properties in the right areas are still generating good interest and comparatively strong prices, however, as the number of Irish and lifestyle buyers have reduced, small farms with limited commercial interest have proved more difficult to sell.

Supply of farmland has remained limited.  Although figures show 28,619 acres of advertised land from August 2009 to August 2010, an increase of 39% from the same period the previous year, this is significantly lower than the historical average which, between 1998 and 2003, was 53,000 acres.  (figures provided by Savills, November 2010.)

The Estate Market has had a good run in 2010.  There has, as with most sectors of the Property Market, been a general lack of supply but encouragingly those Estates offered to the open market have been met with a favourable response.   The key to the successful sale here has been sensible pricing.

Forestry

Although there remains current uncertainty in many industries, confidence in forestry investment is strong with many private investors choosing to add this to their investment portfolio.

Timber prices have seen an increase of more than 20% over the last year.  These have however, not yet reached the peak prices of the mid 1990s.

Although fewer properties were sold during the period October 2009 to October 2010, commercial forestry has held its value and indeed analysis shows a 5% increase in per hectare values, resulting in owners generally choosing to hold onto this asset.  The total market size this year was 28% less than the same period in 2008/2009 but was 42% up on 2007/2008.  (source UPM Tillhill & Savills Forest Market Report 2010)

In Scotland the Forestry Commission (FC) have increased their influence in the market and they accounted for 55% more sales than the private sector, based on an average FC property size of 232 hectares compared to an average size of 149 hectares in the private sector.

Edinburgh

The Bank of Scotland Million Pound Property Report published in October 2010 showed that 29 properties sold for £1m or more in Edinburgh alone, in the first 6 months of 2010.  This accounted for 40% of all million pound plus sales in Scotland, and showed an increase, in Edinburgh, of 8% from the same period in 2009.

Similar to large country properties, property over £1.5m in Edinburgh are taking time to sell.  It  has been and remains a narrow market.  In addition there is significant property available privately and the private market is expanding.  In Edinburgh alone, in September 2010, research by Saint Property showed there was over £50 million of property on sale openly with a sale price of £1.5m or more, mainly in the desirable areas of Barnton, the Grange, Morningside, the New Town, and the West End.

Edinburgh continues to show good value for money with top end Edinburgh properties reaching an average of £370/sq ft, just under £4,000/m2.

Additional Saint Property research has revealed that 2 out of 3 homes costing over £1.5m in Edinburgh are currently owned by banking/finance professionals, of which a significant proportion it is predicted relocate to the South, or abroad, in response to the changing financial climate in Edinburgh. This would increase the supply of such properties to the market.

Business Analyst with the ESPC, David Marshall stated: “Although sales have been ahead of 2009 levels each month since February these increases should be viewed in context. The number of homes selling is still around 50% below that seen in the period leading up to the ‘credit crunch’. Over the course of the year, the supply of properties to the market has exceeded the number of sales. As a result, there are now considerably more properties available for sale than there were at the start of the year and this will afford buyers more power in negotiations than they had previously.”

Edinburgh, and Scotland in general, remains a desirable place to live with The General Register for Scotland revealing that last year the population in Scotland rose for the eighth consecutive year.  In 2009, approximately 10% more people moved to Scotland from other parts of the UK, than left for other parts of the UK, and 47% more moved from overseas, than left to go to live overseas.

This is consistent with the geographical split of buyers and potential buyers that Saint Property Search are seeing with buyers from overseas currently accounting for 30% of our client base.

Looking Forward to 2011

2010 has consistantly seen contradictory statements in the Press and we expect this to continue well into 2011.  This only causes confusion and mistrust for both potential buyers and sellers and we aim to provide a balanced prediction for 2011.

In the US, a combination of weak economic recovery, almost 10% unemployment rate, a stock of over a million distressed properties and uncertainty over foreclosures of major mortgage loan servicers causes analysts to predict an 8% drop in the S&P/Case-Shiller Home Price Index from the second Quarter of 2010 to the third Quarter of 2011.  The Consumer Price Index (CPI) in the US has however only risen 1.2% in the 12 months to the end of October 2010, currently the lowest since records began in 1957.

In contrast in the UK, the CPI rose to 3.3% in November 2010, following record price rises in food, clothing and furniture.  Bank of England Interest Rate Policymaker Andrew Sentance believes the VAT rise to 20%  in January 2011 will cause the CPI to reach 4% and that interest rates will need to rise.

A likely interest rate rise in 2011 coupled with continued tight mortgage finance could bring further pressure on property prices although there will still be demand for the best properties,  in their price ranges, in the most desirable areas.

There are however, encouraging signs for Scotland.  We are seeing a steady increase in enquiries across the board and these enquiries are not only coming from Asia, America, the Middle East and London, but from within Scotland.   Whilst buyers will remain cautious there seems to be a move to break out of the holding pattern we have been in for the last two years and move on.  If this desire is replicated by the sellers, then we will see market activity pick up and head towards a more sustainable level.

In difficult and unpredictable times with continued conflicting views on the Market it would be all too easy to write off the Property Market for 2011.  We are in no doubt that there will require to be price adjustments in some sectors of the Market, and some of these will be sharp reductions.

We fully expect to see an increased supply of property in all sectors and even now there are some very exciting properties being lined up for sale next year.  With this expected increase to the open market we predict there will be a resurgence in the private sales market, with much more changing hands privately and thus not competing with the increase supply on the open market.

We look forward to an exciting 2011, one full of opportunities for the committed buyer.
About Saint Property

Saint Property Search represents individual buyers in their property purchase offering impartial and balanced advice.
For further information, please contact us on +44 (131) 478 4533.

Please forward this to anyone who may be interested in the Scottish Property Market.

·       There continues to be conflicting reports on the state of the property market with some reports advising a rise in property prices and number of sales, whereas the latest report from property website “zoopla “ states that 36.4% of sellers in Great Britain have reduced the amount they are asking for their property at least once since August, with the average person knocking 6.1% off their original asking price, the equivalent of nearly £16,000.

·        The reductions are being made in response to a shortage of buyers, as many people adopt a ‘wait and see’ approach until the outlook for both the property market and the wider economy become clearer. But sellers are continuing to come to the market, creating a mis-match between supply and demand and putting downward pressure on prices in certain sectors.

            Rural

·        Scotland’s Environment Minister, Roseanna Cunningham, announced on 3 November 2010, that she proposes an amendment to the Wildlife and Natural Environment (Scotland) Bill (WNE) to introduce “vicarious liability”.  This would mean that Estate Owners could face £5,000 fines or jail sentences from the persecution of birds of prey. 

The amendment would, for the first time in the UK, make landowners directly liable for wildlife crimes committed by their employees, after confirmed cases where rare birds of prey have been allegedly deliberately killed to protect grouse stocks on shooting estates.

The Scottish Rural Property and Business Association (SRPBA), which represents many of the countries largest landowners, will loby ministers on 5 November 2010 and warn such legislation could cut investment in grouse moors, an industry worth £23m a year to Rural Scotland.

·        A new initiative to help Scottish livestock farmers fully realise the economic and environmental potential of their woodlands is being launched next week by Quality Meat Scotland and the Forestry Commission Scotland.   Both organisations want to investigate how the economic benefits of woodland can be maximised while stock numbers are maintained on Scottish farms.

 Focus meetings, starting on 9 November 2010, will offer the opportunity to view real-life examples of managed woodlands and discuss with the farmers and specialists the successes and challenges of combining forestry with stock keeping. The meetings will be of interest to farmers, foresters, advisers and rural policy staff.

The initiative, which is being facilitated by SAC, will also look at technical issues such as the potential animal health benefits of putting woodland barriers between neighbouring stock, assessing where shelter woods should be located to benefit livestock, as well as any other woodland or livestock farming topics raised by attendees.

            Renewable Energy 

·        In addition to Scotland’s renewable electricity target for the next decade being raised from 50 per cent to 80 per cent, which First Minister Alex Salmond announced at the end of September, it was agreed on 2 November 2010 at the Renewable UK Conference in Glasgow that the Scottish Government were launching a £70m fund to help support the offshore wind industry over the next four years.

The money has been diverted from other priorities of Scottish Enterprise and Highlands and Islands Enterprise. It will be used to improve ports and help companies testing, manufacturing and supplying materials for turbines.

The Scottish government hopes the investment will help Scotland realise the potential of creating 28,000 direct jobs and generating £7.1bn for the economy over the next decade.

·        Siemens, the leading provider of off-shore wind farms in the UK, has joined forces with REpower and Weir Group to launch the UK’s first wind turbine apprenticeship scheme to tackle the engineering skills shortage in this area.  

·       This increase in the amount of wind energy generated in Britain will have a significant effect on buyers of rural property in Scotland.

·       Future planning for wind farms can have a positive or negative effect on property values, depending on the types of property, with some buyers desperate to avoid having their views obstructed, while others are looking for opportunities to take advantage of new renewable energy targets.

It is crucial for those looking to avoid purchasing a property in the vicinity of a planned wind farm that they carry out thorough research first or seek expert advice.

            Edinburgh Properties

·        Previous reports suggest that the average property price in Edinburgh is circa £230,000 with average earnings at approximately £28,000 equaling a P/E ratio of 8.2.  Current UK P/E ratio is reported anywhere between 5.5 and 7 with the long term average being 3.5.

·        With the first-time buyers market struggling: lenders requiring a minimum deposit of 10% and the most competitive deals achieved with 30% deposit, the ESPC have advised that the majority of first-time buyers are relying on financial assistance from their parents to get them onto the property ladder with many parents enquiring about the possibility of remortgaging their own homes in order to provide their children with a deposit.