An Edinburgh-based property developer has broken ground on a new housing project on the outskirts of the city, with support from Bank of Scotland.
Gallo & Gallo Developments is a family-run business that specialises in developing luxury residential properties across Edinburgh. The firm is run by Riccardo and Mary-Anne Gallo, with Riccardo overseeing the construction process while his wife Mary-Anne specialises in interior design through her own company, Mary-Anne Gallo Interiors.
Since 2008, the business has renovated and developed properties across Edinburgh, helping it achieve an annual turnover of more than £3 million.
Now, the firm is focused on plans for a new five-property development beside Baberton Golf Club in Juniper Green. To facilitate the project, Gallo & Gallo Developments approached Bank of Scotland, securing a seven-figure development funding package to support the build of the new homes.
The new development will feature four ‘upside down’ townhouses, with kitchens and living rooms located on the top floor to take advantage of the views of Edinburgh Castle, while the bedrooms will be located on the lower floors. The former professional golf shop at Baberton Golf Club will also be converted, taking the total number of townhouses to five.
The new homes are designed for families and early retirees and are expected to complete by early Spring 2022.
Gallo & Gallo Developments is also planning to embark on its first venture outside of Edinburgh, with a new multi-unit project in Gullane, East Lothian. This development is expected to go live mid-2022.
Riccardo Gallo, director at Gallo & Gallo Developments, said:“Myself and Mary-Anne have always had a passion for property development and renovation, and we’ve spent more than a decade expanding our footprint here in Edinburgh.
“When we spotted the opportunity in Juniper Green, we knew it would be the perfect next venture for us. While the scale of the development meant it would be our biggest challenge to date, it’s a tremendously exciting project for us. Thanks to Bank of Scotland, we’ve been able to secure the finance required during a time where demand for residential property in the capital continues to grow.
“That said, this demand is extending with people increasingly keen to live beyond the city limits. This is why we’re hoping to break ground on a new development in Gullane in summer next year and continue to grow our portfolio across the central belt of Scotland.”
Douglas Spowart, relationship director at Bank of Scotland, said: “The latest monthly House Price Report from ESPC has shown that house prices in Edinburgh are still rising as buyer demand continues to outweigh supply.*
“Gallo & Gallo Development’s new project will provide a range of new properties for families in Edinburgh and boost the supply of residential properties in the city.
“We’ll continue to support the business as it continues on its growth journey, and also stand by firms in other sectors as they look to take advantage of new and exciting growth opportunities.”
Councils will be given powers to ensure short-term lets are safe and meet the needs of their local communities under legislation laid before the Scottish Parliament.
Under the legislation, all local authorities will be required to establish a short-term lets licensing scheme by October 2022. Existing hosts and operators will have until 1 April 2023 to apply for a licence for each property that they operate as a short-term let. All short-term lets in Scotland will have to be licensed by 1 July 2024.
The legislation was developed after residents across Scotland raised significant concerns about the impact of short-term lets on their communities, including noise, antisocial behaviour and the impact on the supply on housing in some areas.
It will ensure the needs and concerns of communities are balanced with wider economic and tourism interests.
Housing Secretary Shona Robison said: “We have already introduced legislation allowing councils to establish short-term let control areas and manage numbers of short-term lets. This is the next significant step to delivering a licensing scheme that will ensure short-term lets are safe and the people providing them are suitable.
“We want short term lets to continue making a positive impact on Scotland’s tourism industry and local economies while meeting the needs of local communities.
“Short-term lets can offer people a flexible travel option. However, we know that in certain areas, particularly tourist hotspots, high numbers of lets can cause problems for neighbours and make it harder for people to find homes to live in.
“The licensing scheme and control area legislation give councils the powers to take action where they need to.
“We appreciate the input from tourism bodies, local government, community organisations and others in reaching this point, and look forward to delivering a short-term lets licensing scheme that works for Scotland.”
Further information on the Scottish Government’s short-term lets legislation is available online.
Acute rental demand over Q3 2021 has pushed UK rental growth to its highest level since 2008
Annual rent growth has increased by 7.2% in Glasgow and 3.6% in Edinburgh
Demand continues to outstrip supply, which is running at 43% below the five-year average – exerting an upward pressure on rents
Average UK rents are now tracking at +4.6% on the year [and 6% excluding London], after climbing 3% over the last quarter – with rental demand doubling in central Leeds, Manchester and Edinburgh and London in Q3 v. Q1
Rental growth is close to, or at, a 10-year high across most UK regions – except for in London and Scotland
After 15 months of consecutive falls, London’s rents have swung back into positive territory, rising by 4.7% between June and September, as offices reopened and city life resumed
The structural undersupply of rental properties across the country and the strength of the employment market will support rental growth into 2022
UK rental growth [excluding London] is set to ease slightly to 4.5% by the end of 2022
UK rental market growth has reached a 13 year high as renters rush back to city centres, reports Zoopla, the UK’s leading property portal, in its quarterly Rental Market Report.
Record price growth defines new era for the UK rental market
Acute tenant demand over the third quarter of 2021 has propelled UK rental growth to its highest level for over a decade [13 years].
The market is being shaped by an ongoing supply and demand imbalance, with demand continuing to outstrip supply, which is running at 43% below the five year average and exerting an upward pressure on rents.
The imbalance has been compounded by both long-term structural issues such as landlord divestment following the 3% stamp duty levy introduced in 2016, and more the immediate post-lockdown demand, which collectively have eroded available supply.
Average UK rents are now tracking at 4.6% year on year, after climbing 3% over the last quarter. Excluding London, where the market has lagged, average UK rental growth has reached a 14-year high of +6%.
Rental growth is also explained in part by tenant demand moving up the price bands [see figure 1]. This reflects the ongoing search for space, which has not only characterised the sales market, but the rental market, too.
UK monthly rents now account for 37% of an average income for a single tenant occupant; however, even with strong rental growth, the measure of affordability remains in line with the five year average [see figure 2]*.
The regions registering the highest levels of rental growth are among those that are the most affordable when compared to the UK average, and as such, there has been more headroom for rents to increase.
Rental growth is close to, or at, a 10-year high across most UK regions – except for in London and Scotland. Rents are up most in the South West (9%) year on year, followed by Wales (7.7%) and the East Midlands (6.9%).
In many of the UK’s largest cities, annual rental growth is running well ahead of the five-year average rate of growth. Bristol leads with 8.4% growth in the year to September, followed by Nottingham at 8.3%, and Glasgow at 7.2%.
Rental demand in the central zones of Manchester, Edinburgh and Leeds has at least doubled over Q3 compared to Q1, and in Birmingham demand has increased by 60% – buoyed by the return of office workers and students, and the lure of city life.
Figure 2
London rents rebound into positive growth – but remain lower than pre-pandemic levels
After 15 months of consecutive falls, London’s rents swung back into positive territory, up +4.7%, in Q3. This amounts to annual growth of +1.6% compared to falls of almost 10% at the start of the year.
As with other major UK cities, market activity rose significantly in Q3, with tenancies agreed in London running 50% above the five-year average, underlining the bounceback in the market as offices reopened and city life resumed.
Despite this upward trajectory, given the falls over the last 18 months, average London rents are still 5% lower than they were at the start of the pandemic.
Rents forecast to rise by a further 4.5% by the end of 2022
Looking ahead to the new year, the structural undersupply of rental properties across the country is expected to support rental growth into 2022.
In addition, the supply shortage coupled with the strength of the employment market which, despite the pandemic, is set to remain robust, will in turn support demand and sustain rental growth.
While the level of rental demand might ease in the near term in line with seasonal trends, demand levels will remain higher than usual, especially in city centres, where there is an element of pent-up demand being released.
On the supply side, rental stock will remain tight, amid lower levels of investment into the sector by landlords, and this will underpin rental pricing. There is more leeway for stronger rental growth in areas of the country where rents are relatively more affordable, suggesting that rents could rise above earnings outside of the south of England, supporting rental growth across the UK excluding London at 6% in 2021 and 4% in 2022.
Meanwhile, London rental growth is expected to pick up to 3.5%, with rents ultimately exceeding pre-pandemic levels.
Gráinne Gilmore, Head of Research, Zoopla, comments: “The swing back of demand into city centres, including London, has underpinned another rise in rents in Q3, especially as the supply of rental property remains tight.
“Households looking for the flexibility of rental accomodation, especially students and city workers, are back in the market after consecutive lockdowns affected demand levels in major cities.
“Meanwhile, just as in the sales market, there is still a cohort of renters looking for properties offering more space, or a more rural or coastal location.”
*The methodology Zoopla has used to calculate affordability has changed from the last quarter; Zoopla is now using ASHE data, and previously used the Labour Force Survey.
Soaring rents across Lothian demonstrate the need for a system of rent controls to be introduced, according to Scottish Greens Lothian MSP, Lorna Slater.
New government statistics published this week show that between 2010 and 2021 the average rent for a 2 bedroom property in Lothian increased by 41.7%. This is the biggest increase anywhere in Scotland.
The cooperation agreement between the Scottish Greens and the Scottish Government includes a commitment to introduce a new national system of rent controls. This will be part of a package of enhanced rights for tenants.
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Commenting, Lorna Slater MSP said:“Over the past decade, far too many tenants in Lothian and across the country have faced extreme rent rises.
“We simply cannot leave something as fundamental as people’s homes to market forces. I’m proud that with Greens in Government we will bring rent controls to Scotland as part of a fair deal for renters.”
Edinburgh Letting Agency Clan Gordon receives nationwide recognition at 2021 allAgents Awards
At the 12 November allAgents Awards black tie event at the Queen’s Hotel in Leeds, Edinburgh letting agency Clan Gordon was named as ‘Best Lettings Agent in Edinburgh’, ‘Best Lettings Agent in Scotland’ and ‘Best Overall Agent in Edinburgh and Scotland’.
The allAgents Awards are the UK’s Top Customer Property Review Awards and each winner is chosen through customer votes.
Amanda Lamb, property expert and allAgents Awards host said: “Coming from an estate agency background I know and appreciate just how important customer reviews are in this competitive industry and what receiving recognition from the industry’s very own ‘Tripadvisor’ will mean to the winning agencies.”
Clan Gordon’s Managing Director Jonathan Gordon said: “All awards are important but ones that are voted for by customers are the most valuable because they are a firm assurance that we’re getting things right.
“To beat all other estate and letting agents in the Edinburgh and Scotland categories to the overall title is an amazing achievement and the Clan Gordon team should be proud of the contribution they have made at an extremely difficult time.
“The pandemic posed huge problems for the property sector, but we met them head-on, quickly adapting to home working for our employees and installing a high-tech new telephone system to ensure customers were not adversely impacted.
“We also switched to virtual viewings and made sure our services continued safely within the guidelines issued by the government. This investment has been recognised with these awards and we are extremely proud of the achievement.”
To find out more about Clan Gordon or to schedule a call visit:
✓ 30 of the 32 local authority areas continue to see prices rise over the year
✓ Monthly growth rates are softening
✓ Top 5 local authority areas by value all set new record average price levels
Produced by Acadata on behalf of
Alan Penman, Business Development Manager at Walker Fraser Steele, comments: “At the end of August we reported that the average Scottish house price stood at £211,029 – at that point a new record high.
“This September we have seen the upward momentum continue. Scotland’s average house price at the end of September stands at £212,832, which sets yet another record, having risen by some £2,200 – or 1.0% – in the month.
“Five local authority areas in September were responsible for 58% of the positive movement in Scotland’s average house price. The five areas concerned, in order of influence, were South Lanarkshire, the City of Edinburgh, Glasgow City, East Dunbartonshire and Highland.
“More generally prices rose in 19 of the 32 Local Authority areas in Scotland. The largest increase in average prices, of 6.3%, was in Inverclyde. In second place on the mainland was East Dunbartonshire, with an increase in prices of 5.2%.
“There were plenty of high-value sales in East Dunbartonshire, with a number of detached sales taking place in Bearsden – located approximately six miles to the North West of Glasgow – the most expensive being on the Roman Road, priced at £1.3 million.
“This underlines how property at the top-end continues to underpin this growth as people opt for more space and continue to embrace working from home. September often provides momentum to the market too as it is not untypical for families to reassess their needs as the new school year gets underway.”
Commentary: John Tindale, Acadata Senior Housing Analyst
The September housing market
Scotland’s average house price at the end of September stood at £212,832, which sets yet another record, having risen by some £2,200 – or 1.0% – in the month. The 1.0% growth rate represents a slight softening from the 1.7% seen in August.
On an annual basis, average house prices have increased by close to £25,000 – or 13.2% – over the last twelve months. This is the highest rate of all four nations, and nine regions in the United Kingdom.
It doesn’t come as too much of a surprise to learn that house prices rose in September. Looking at the last seventeen years, house prices in Scotland have increased on thirteen occasions in September. Estate Agents frequently mention that housing activity picks up towards the end of the school holidays, as families potentially reassess their housing needs at the start of the new school year.
In addition, this year we also have the added impetus of the lifestyle changes associated with the pandemic and “working from home”, which has brought about a shift in housing preferences for larger properties, with space for home-working becoming a prime requirement.
The demand for larger premises has continued throughout September, and for some includes moving to Scotland from London, or from other major cities in the UK and beyond. However, the supply of larger homes coming to the market currently remains relatively low, which results in strong competition for those properties that do become available, hence keeping prices high.
We can see that prices reached a mini-peak in March 2021, immediately prior to the ending of the LBTT tax holiday on 1 April 2021. Average prices then started to fall, as buyers of high-value properties reduced in number (see Table 2). However, the reduction in high-value sales only continued through April and May, with June, July and August seeing a return of the higher-value transactions.
In July, August and September 2021, we can see that prices once again regained their earlier momentum seen during the second half of 2020, despite the savings arising from the LBTT tax holiday no longer being available.
Figure 1. The average house price in Scotland, for the period September 2019 to September 2021
Transactions analysis
Monthly transaction counts
The fall in the number of transactions for the period March 2020 to August 2020 is clearly visible. However, what is also clearly demonstrated is that the number of sales for each month from September 2020 to March 2021 has surpassed that of the same month in the previous six years.
In addition, the spike in sales that took place in March 2021 – as the tax holiday expiry date approached – is plain, although this total was exceeded by the volume of sales in October and November 2020, when monthly sales during the pandemic reached their peak.
Also clear is the fall in sales in April 2021, to levels below those in all previous years except for 2016 and 2020, indicating the extent to which buyers had managed to bring forward their purchases into March 2021 to take advantage of the tax holiday.
For the record, the peak in sales in March 2016 was also tax-related, and came one month ahead of the introduction of the then 3% LBTT surcharge (now 4%) on second homes and buy-to-let properties, which tax was pre-announced to commence from April 2016.
Sales volumes in April and May 2021 remained lower than the equivalent months in 2017 and 2019, and appear to have been roughly on a par with the levels seen in 2018. However, in July 2021 the number of properties sold once again appears to have been higher than the same months in the previous six years, although sales in August 2021 returned to 2017 levels.
Comparing total sales in 2020 with those of 2019, there was a 14% fall in the overall size of the market. However, looking at the number of transactions for the first eight months of 2021, and comparing with the same period in 2019 (2020 figures are distorted by the lockdown in the early stages of the pandemic), sales are up by 11%, although this does include the spike in March 2021, which will have enhanced the 2021 figures.
The city council says it is on track and committed to delivering on its ambition to deliver 20,000 affordable homes by 2027, despite the UK-wide impact on the development of affordable homes following the global pandemic.
In its Strategic Housing Investment Plan (SHIP) 2022-27 report being presented to the Housing, Homelessness and Fair Work committee next week (4 November) councillors will be asked to approve the proposals ahead of submission to the Scottish Government.
The SHIP 2022-2027 highlights the progress being made which includes the projection that 7,500 new affordable homes will be approved by 31 March 2022 and 5,790 completed. There are currently over 2,100 homes under construction on 34 sites across the city.
A ‘strong pipeline’ has also been identified of 11,118 affordable homes that could be approved for site start and 10,124 potential completions by 2027.
Despite over 18 months of disruption for the entire Scottish house building sector, it is anticipated that the delivery of the interim milestone of 10,000 homes will be achieved midway through 2023. There are currently 25 projects, equating to 1,456 approvals, that have been delayed, primarily as a result of the COVID-19 pandemic. Over 75% of these projects have just slipped into the subsequent year.
This comes in the wake of national pressures on the UK and Scottish house building sector. In the Scottish Government’s “Housing statistics quarterly update: September 2021” it sets out that in June 2021 affordable housing approvals were down 36%, compared to the same time last year. Affordable housing completions are also down 5% year-on-year, but when compared to 2019, there is a reduction of over 15%.
Added to this, as construction projects worldwide have recommenced post-pandemic, a surge in materials demand and prices has been seen which build on the pressures being seen as a result of the UK’s exit from Europe. The Office for National Statistics projects a rise of 7-8% in material prices, with increases for certain materials, such as timber, expected to more than double during the course of the year.
Councillor Kate Campbell, Convener for the Housing, Homelessness and Fair Work Committee, said: There are extreme pressures on housing in Edinburgh and a desperate need for more affordable homes.
“We’re doing all we can to drive forward our house building programme so that our residents can have permanent homes that are energy efficient, safe and affordable. There are constraints, from Brexit and Covid, which have had a severe impact on supply chains, material costs and the labour market, which are affecting housebuilding across the UK.
“That said, the good news is that this is the largest ever SHIP brought forward. It sets out a positive long-term picture and shows we are on track to deliver a programme for 20,000 affordable homes over ten years.
“We’ll continue to work hard with our housing association partners to build more homes for social rent. But we need to look at what more we can do. We were the first local authority to develop an Affordable Housing Policy through planning – where 25% of the land on any new development must be given for affordable housing. Now, through the City Plan, we’re proposing to increase the affordable allocation from 25% to 35%.
“We have a strong track record in delivering new social rented homes. This has resulted in an additional £36 million of grant funding being given to Edinburgh over the last five years. We’ll work hard to make sure this continues, alongside making the case to the Scottish Government for increased investment in social housing in our city.”
Councillor Mandy Watt, Vice Convener of the Housing, Homelessness and Fair Work Committee said:“The Edinburgh housing market has remained resilient throughout the pandemic, however the full impact of lockdown & the continuation of restrictions, combined with Brexit, on the wider economy & the job market is not fully known.
“Those on low incomes will continue to be the greatest affected and therefore affordable housing needs to play a key role in a green and sustainable recovery.”
In term of delivery, funding and land supply remain two key challenges for delivery. The SHIP will require £329.6m in grant funding, or £65.9m per annum on average, or a 29% required annual increase, based on current benchmarks in order to meet the overall ambition of 20,000 homes. The Council will continue to work with Scottish Government and its partners to stretch available grant funding as far as possible to maximise the number of social rented homes that can be delivered.
While our Registered Social Landlord (RSL) programme is almost entirely dependent upon private developers bringing forward sites for development through the Affordable Housing Plan (AHP), we’re looking to mitigate this risk, through our Land Strategy by working on 20-minute partnerships with private sector & RSLs, inviting interest from the private sector to bringing forward opportunities for Council led delivery and working closely with public sector partners.
Average house prices in Scotland reach new high of £211,029
All 32 local authority areas have seen prices rise over the year
Transaction levels in August at seven-year high
Monthly average increase is 1.8% (August), average annual increase is 12.1%
Alan Penman, Business Development Manager at Walker Fraser Steele, comments:“At the end of July, the average Scottish house price stood at £207,344 but by the end of August this figure was £211,029 – reaching a new record high, with a rise of £3,685, or just under 2% in the month. The race for space continues to support the prices of larger properties. The scarcity of this type of stock coupled with the continued high demand means prices remain strong.
“Property at the top-end has performed well throughout 2021 and there is no sign of any imminent let-up. We noted last month that the exceptional performance of larger properties was likely to continue and this month we have more evidence to support that view.
“People’s preference for more space and working from home has meant buyers have often sought properties that can accommodate new lifestyles. But we should remember that borrowers’ ability to afford these properties has in no small way been a result of the Land and Buildings Transaction Tax holiday earlier in the year, and the continued record low interest rates.
“In terms of the geographical performance of the Scottish regions, the area with the highest annual increase in average house prices in August was the Scottish Borders, where average prices have risen by 28.4%, which again reflects the fact that the mix of homes that have been sold in this area has trended towards the more expensive end of the market.”
Average House Prices in Scotland for period August 2020 to August 2021
Commentary: John Tindale, Acadata Senior Housing Analyst
The August housing market
Scotland’s average house price at the end of August stood at £211,029, which set a further record, having risen by some £3,685, or 1.8%, in the month. The 1.8% growth rate represents a slight softening from the six-year high of 2.7% seen in July.
As we reported last month, one of the main reasons for the current upward movement in prices is a result of the lifestyle changes associated with “working from home”, which has brought about a shift in housing preferences to larger properties, with space for home-working becoming a prime requirement.
The demand for larger premises has continued throughout August, and for some includes moving to Scotland from London, or from other major cities in the UK and beyond. However, the number of larger homes in Scotland available for purchase remains thin, with strong competition for those properties that do come onto the market, helping to keep prices high.
Looking at Figure 1 below – which tracks the average house price in Scotland – we can see that prices reached a mini-peak in March 2021, immediately prior to the ending of the LBTT tax holiday on 1 April 2021. Average prices then started to fall, as buyers of high-value properties reduced in number (see Table 2).
However, the reduction in high-value sales only continued through April and May, with June and July seeing a return of the higher-value purchases. This was perhaps assisted by those who had decided to move away from buying properties in England, where the threshold on tax savings had reduced to £250,000 at the end of June.
In July and August 2021, we can see that prices once again regained their earlier momentum, with monthly price increases more than matching those experienced during the final quarter of 2020, despite the savings arising from the LBTT tax holiday no longer being available.
Transactions analysis
Monthly transaction counts
Figure 2 below shows the monthly transaction count for purchases during the period January 2015 to August 2021, based on RoS (Registers of Scotland) figures for the Date of Entry (Applications Date for August 2021). The fall in the number of transactions for the period March 2020 to August 2020 is clearly visible. However, what is also clearly demonstrated is that the number of sales for each month from September 2020 to March 2021 has surpassed that of the same month in the previous six years.
In addition, the spike in sales that took place in March 2021 – as the tax holiday expiry date approached – is plain, although this total was exceeded by the volume of sales in October and November 2020, when monthly sales during the pandemic reached their peak. Also clear is the fall in sales in April 2021, to levels below those in all previous years except for 2016 and 2020, indicating the extent to which buyers had managed to bring forward their purchases into March 2021 to take advantage of the tax holiday.
For the record, the peak in sales in March 2016 was also tax-related, and came one month ahead of the introduction of the then 3% LBTT surcharge (now 4%) on second homes and buy-to-let properties, which tax was pre-announced to commence from April 2016.
Sales volumes in April and May 2021 remained lower than the equivalent months in 2017 and 2019, and appear to have been roughly on a par with the levels seen in 2018. However, in July and August 2021 the number of properties sold once again appears to be higher than the same months in the previous six years.
Comparing total sales in 2020 with those of 2019, there was a 14% fall in the overall size of the market. However, looking at the number of transactions for the first eight months of 2021, and comparing with the same period in 2019 (2020 figures are distorted by the lockdown in the early stages of the pandemic), sales are up by 12%, although this does include the spike in March 2021, which will have enhanced the 2021 figures.
Scotland transactions of £750k or higher
The above table shows the number of transactions per month in Scotland which are equal to or greater than £750k. The threshold of £750k has been selected as it is the breakpoint at which the highest rate of LBTT becomes payable.
The table shows that there have been 648 sales in excess of £750k during the first eight months of 2021. By coincidence this happens to be the same number of sales over £750k that took place in the whole of 2020, i.e. in 2021 the same total as in 2020 has been reached after just eight months. It can also be noted that the 2020 total was the highest number of sales of properties in excess of £750k of the previous six years.
The reasons for this dramatic increase in top-end sales in 2021 are, as previously discussed, partly to do with the change in preference for larger properties. Home movers were thus encouraged to move to premises which better suited their updated needs. But additionally, we should mention the record low interest rates, which made the purchase of a top-end property more affordable, as well as the tax savings associated with the LBTT holiday, up to the end of March 2021. This encouraged the whole market to be more adventurous in its outlook.
As reported last month, we should also point out that one tends to get more “bang for one’s buck” in Scotland than in England. For example, the recent purchase of a £1 million home in the Scottish Borders included 5 bedrooms, 2.8 acres of garden grounds and 5 acres of grazing paddock. In London £1 million will, in some boroughs, enable you to purchase a three bedroomed Victorian terrace, with minimal garden space. It is therefore little wonder that some Londoners are looking to move to Scotland, if the workplace allows.
Local Authority Analysis
Annual change
The average house price in Scotland has increased by some £22,850 – or 12.1% – over the last twelve months, to the end of August. This is 1.4% higher than the 10.7% recorded one month earlier, and is the highest rate seen since March 2016, that date being just ahead of the introduction of the LBTT Additional Dwellings Supplement of 3% – which was introduced on the purchase of buy-to-let properties and second homes in Scotland (a rate which was subsequently increased to 4% on 25 January 2019).
This increase in the rate of annual growth in house prices comes as something of a surprise – we had assumed that since the ending of the LBTT holiday in March 2021 prices would begin to fall gently. However, it would appear that the shift in housing preferences for larger properties – with space for home working – rather than commuting to places of work, continues to influence strongly the current housing market.
In August 2021, all 32 of the local authority areas in Scotland have seen their average prices rise over the previous twelve months.
The area with the highest annual increase in average house prices in August was the Scottish Borders, where average prices have risen by 28.4%. This is not to say that each individual property sold in the Scottish Borders over the last year has increased in value by 28.4%, but rather the mix of homes that have been sold in the area has trended towards the more expensive end of the market. For example, in the Scottish Borders over the last three months there have been 12 properties sold with a value in excess of £750k, compared to just 2 such sales during the same three months in 2020.
Monthly change
In August 2021, Scotland’s average house price rose by £3,685, or 1.8%, and now stands at £211,029. This rise is smaller than the £5,530 increase seen in the previous month of July, indicating a softening in the rate of price growth over the summer.
Prices rose in August 2021 in 24 of the 32 Local Authority areas in Scotland, down from the 28 areas which saw prices increase in July. The largest increase in average prices in August, of 5.9%, was in Stirling, although this increase was assisted by the sale of a £2.4 million, nine-bedroom detached home, on the outskirts of Strathblane.
On a weight-adjusted basis, which takes into account both the increase in average price and the number of transactions involved, 5 local authority areas in August were responsible for 52% of the positive movement in Scotland’s average house price. The five areas concerned, in order of influence, were the City of Edinburgh, Glasgow City, Perth and Kinross, Aberdeen City and Stirling.
It is perhaps apposite that Aberdeen City appears in the top five authorities with the highest increase in prices in the month, as increases in oil and gas prices have been particularly newsworthy of late. All property types in Aberdeen City have experienced increases in their average prices in August, with the largest increase being seen in flats, up from an average £115k in July to £121k in August. Overall, the highest average property prices in Aberdeen occurred in March 2015 at £259,125, compared to an average £202,189 this August. At the time of the record prices in Aberdeen, the average price of flats in the city had reached £205k – clearly there is still some way to go before Aberdeen City’s housing market returns to its previous record levels.
Peak Prices
Each month, in Table 3 above, we highlight in light blue the local authority areas which have reached a new record in their average house prices. In August there are 16 such authorities, up from 12 in July. It is noticeable in Table 3 that eight of the top ten local authority areas ranked by price have reached new peaks, reinforcing the proposition that the main drivers of the current price increases seen in Scotland are associated with the price competition being experienced at the top-end of the housing market.
We can note that, in August 2021, Scotland’s overall average house price has itself also reached a new record level.
Heat Map
The heat map below shows the rate of house price growth for the 12 months ending August 2021. As reported above, all 32 local authority areas are reporting an increase in their housing values over the last year. The highest increase over the twelve months to August 2021 was in the Scottish Borders at 28.4% and the lowest in the Shetland Islands at 0.7%.
Residential developer HUB and Bridges Fund Management, a sustainable and impact investor, have acquired a ‘significant’ 2.6-acre site on Leith’s Baltic Street.
The site has an existing planning permission for a student residential development, secured by vendors Sundial Properties and local architects Michael Laird Associates.
HUB intends to reconfigure the proposal to deliver a residential-led scheme, comprising of Build to Rent apartments with a variety of mixed commercial uses at ground floor level.
HUB will work with the Council and local stakeholders to build upon the existing consent, maintaining the established design narrative, whilst enhancing the proposals to deliver a residential scheme that maximises the site’s potential.
This is the ninth deal on which HUB and Bridges have partnered and builds on their successful track record of delivering well-designed, community-focused residential schemes.
The deal is HUB and Bridges’ second acquisition in Edinburgh, following their recent purchase of the 1.5-acre Beaverhall site in Canonmills, where they are currently developing plans for a mixed-use scheme incorporating build-to-rent homes and affordable, contemporary studio space for the area’s local artistic community.
The deal also continues HUB’s expansion into key cities across the UK, with schemes already underway in Leeds and Digbeth, Birmingham.
Building on HUB and Bridges’ strategy of delivering homes in well-connected locations, the site is ideally located adjacent to Edinburgh’s new Tramline extension, due to open in late 2022.
The new route will connect the port in the east, through the city and to the airport in the west, meaning that residents at HUB’s scheme will have easy access to the heart of Edinburgh and beyond, whilst enjoying the lifestyle offering of the city’s most vibrant neighbourhood.
Just five minutes’ walk from the waterfront, the site offers easy access to numerous independent shops, bars and restaurants, as well as music and arts venues.
Robert Sloss, CEO and co-founder of HUB, said: “As a resident of Edinburgh, I am particularly happy that HUB is further investing in our capital city.
“Leith is full of creativity and innovation, and exemplifies exactly what HUB is looking for in terms of ‘lifestyle’ locations. We look forward to bringing our proven experience in delivering beautifully designed, mixed-use schemes to this fantastic site, building upon the existing proposal to deliver a great new place to live.
“We are sensitive to the legacy of the historic gasworks and are excited to rejuvenate it into a modern living quarter for Leith.”
Simon Ringer, Head of Property Funds at Bridges Fund Management, said: “We are delighted to complete this second investment in Edinburgh, a city where there is strong demand for more high-quality, sustainable lower-cost homes.
“Leith is a really exciting area, and we want to create a development that complements this site’s rich heritage and benefits the local community.”
HOUSE hunters are prioritising green areas and more space over traditional city centre dwellings in the latest market review by property experts, Rettie & Co.
According to Rettie & Co’s. Scottish Housing Market Summer Review, demand for East Lothian homes is on the rise, while homes brought to the market in the region last year fell by 28% against 2019 figures.
The property specialists believe the change in attitudes can be attributed to a greater acceptance of the hybrid working model.
With more companies offering the flexibility of working from home, potential buyers are opting for more value for money by seeking properties out with Edinburgh.
It comes after the firm’s latest 140 home development in Musselburgh, The Wireworks, in partnership with property developer Dundas Estates, has received 600 enquiries in just 3 months.
Marketing Account Manager at Rettie & Co., Ross Matheson, said: “We are seeing a greater number of potential buyers enquiring about homes out with the major cities across Scotland.
“This can be attributed to the changing attitudes to the working environment post-pandemic. With a greater acceptance of working from home, we are finding buyers are willing to live further from large cities in search of more spacious homes and greater green space.”
According to statistics from Rettie & Co. the average price of a house in Edinburgh stood at around £282,420 last year, while the average property price was close to £10,000 cheaper in East Lothian at around £272,268.
Ross, said: “Musselburgh is proving to be a very popular destination for potential buyers. We have recently had a spate of enquiries in and around the area.
“Being a commuter town just outside of Edinburgh, Musselburgh offers the best of both worlds; city convenience with an abundance of green space and amenities such as the River Esk, nearby beaches and the Musselburgh Racecourse, as well as the renowned Luca’s Ice Cream parlour.”
Head of Sales & Marketing at Dundas Estates, Craig Fairfoull, said: “It is important that we meet the demand for housing in what is becoming an ever-popular destination in the east of Scotland.
“With that in mind, we are investing heavily in the local community over the course of construction; we are delighted to be working alongside Rettie & Co.”
Dundas Estates, through a partnership with Tesco, East Lothian Council and NHS Lothian, acquired The Wireworks site after receiving planning permission to regenerate the former Brunton Wireworks site and neighbouring land in 2008.
The development will have the capacity to store 140 bicycles in internal and external bikes stores. Electric car charging facilities will be available throughout the development. Private gardens and balconies will also be available at various apartments.
The Livingston-based firm is committing, through Section 75 payments, to contribute up to £400,000 along with the other partners which will be invested into local schooling and infrastructure.
To learn more about Dundas Estates’ Wireworks development, call 0131 243 3858 or email: thewireworks@rettie.co.uk
