Scottish house prices continue to rise

Residential sales in the North of England have cooled in the last six months or so, but in Scotland they continue apace. For five years Scottish prices have been rising strongly, recently even outstripping the much more talked about boom in London. Only Northern Ireland has exhibited greater growth.

Anything on the market for over £1.5m is quickly snapped up, and estate agents claim that properties in the two to three million bracket could be sold ten times over. Where three years ago a property was selling for £2m, it is now going for £5m.

Locals have started to demonstrate a desire to climb the property ladder and they are able to beat off competition from non-locals for undervalued land. Much Scottish land is selling for £2,500 an acre, compared with £3,000 in England an amazing £9,000 around Dublin. If you sold a square foot in Kensington you could buy an acre in Scotland, but half the sales in Scotland are to folk from north of the border, as the Scots have been demonstrating new found wealth, generated by new business and commerce.

As well as locals buying up land and property, Scottish expats are returning from England or overseas, attracted not only by the property opportunities, but also by cheaper education fees, lower prescription charges, good broadband access and wonderful scenery and healthy air.

With demand on the increase supply is inevitably stretched. In 2006 there were 3,319 residential sales worth over £400,000 and a mere 164 over £1m. Numbers are said to be on the increase in 2007. Land in Scotland tends to be owned by a very few people and desirable land is not often available. Although land can be seen as an investment, it is the fun to be had from the land that attracts more people: think large houses, parties, hunting, shooting, fishing, whisky, tweed and kilts!

Unfortunately, Findynate by Strathtay is the only sporting estate in the whole of Scotland that is currently available – priced at £4m. As it’s only 28 miles from Perth and 66 miles from Edinburgh airport, it is also comparatively accessible. Capital appreciation for this kind of property has been such in recent years that people have no desire to sell. That makes it a strong market when one does become available. People have come from far afield to view Findygate, for example, Canada and the Far East. Sealed bids are invited and the date has been extended due to the high interest.

As with all property markets accessibility is critical and more regular flights, rail travel and improved internet access have made Scotland no longer out of reach, yet with a get-away feel.

The planning system in Scotland is strict, so it is almost certainly pointless buying a plot of land and hoping to build your dream home on it. The best bet of creating your own grand design is to buy a house and knock it down to replace it with something new.

Glasgow and Edinburgh properties are in demand, but so are those in Inverness, where the economy is booming, having received investment from business and light industry and served well by air and the A9. Aberdeen is also doing well, with a six week sale time and five or six bids for most properties by the closing date. Oil has aided prosperity in Scotland and this has boosted prices for country properties within reach of the “granite city”.

Stretching imagination further, you might want to invest in a whole Scottish island. The last one that came up for grabs was South Uist in the Outer Hebrides in 2006. The next best thing is now just a corner of an island. Islay House on Islay has 24 bedrooms and 28 acres of land. Oh, and the Cuillin Hills in Skye are also on the market!

The property price map of England and Wales shows prices easing faster the further north you go – but not in Scotland. In July prices in Scotland were up by 3% and annual property inflation is at 21.3%, which is higher than London. Prices are still cheaper than the rest of Great Britain so there is still some mileage left.

The Scottish market works in a different way from that in England and Wales. The Scots operate an “offers over” method, with a version of Home Information Packs (HIPs) to be introduced next year. These will be Purchaser Information Packs (PIPs) and will require a valuation by the seller prior to marketing the property. The aim of the Scottish system is to speed up the sales process and to save buyers having to pay for multiple surveys. PIPs will include a survey. Buyers will, in the meantime, have to submit a binding written offer through a solicitor, and sellers can sell pre-emptively if they wish. If not, then a seller is obliged to accept the most attractive offer.