Edinburgh

While Sundial boasted a remodelled Georgian two-bed apartment sale of £345,000 in the street, comparable properties nearby were trading for about £180,000 in Februaury.

Proving that Edinburgh’s experienced home buyers will only open their wallets for the right homes in the right locations, in Edinburgh’s periphery the market for unvariegated newbuild homes is stagnant. Lyell says: “Edinburgh’s market always sorts itself out in chunks. With the £600,000-plus sector having grown this year we can expect a knock-on effect further up the scale next year.

“One factor possibly affecting the most expensive sectors of the market in the capital are the bonuses being given out in London’s financial sector. With so much money swilling around in London, buyers are perhaps putting off a relocation move to Scotland. We actually see our biggest price gains here directly after a London boom rather than during it, so for now buyers can afford to be choosy and often look at as many as 10 properties before committing themselves.

“At the height of our boom they’d have been able to view a fraction of that number, such were the levels of demand here.” Still, despite the slowdown, Knight Frank’s John Coleman claims that big sums are changing hands, typically in private sales. “Knight Frank raised the bar in Edinburgh this year, trumping the previous record sale of £2.75m set in 2004 with the capital’s first £4m house this year. These are the kind of sums you’d expect to pay in London, but we believe there is a lot of money in our system and there are as many Scots as international buyers able and willing to spend that kind of money in Edinburgh.” Incredible as it sounds, there could still be some growth in Scotland’s most exposed market.

New 1-bed apartment (Haymarket) September 2005: £140,000 September 2006: £145,000 September 2007: £155,000

Second-hand 1-bed apartment (Stockbridge) September 2005: £174,000 September 2006: £175,000 September 2007: £180,000

New 2-bed apartment (Stockbridge) September 2005: £190,000 September 2006: £200,000 September 2007: £210,000

Second-hand 2-bed apartment (New Town/West End) September 2005: £230,000 September 2006: £245,000 September 2007: £275,000

Second-hand 3-bed semi (West End) September 2005: £480,000 September 2006: £490,000 September 2007: £500,000

Second-hand 4-bed semi (Stockbridge) September 2005: £550,000 September 2006: £600,000 September 2007: £625,000

4-bed town house (Calton) September 2005: £1.3m September 2006: £1.3m September 2007: £1.4m

Second-hand 2-bed apartment (Herriot Row) September 2005: £520,000 September 2006: £510,000 September 2007: £510,000 (Source: Menzies Dougal, Anderson Strathern, Stewart Saunders)

Edinburgh East

Median price at May 2006: £158,086
General increase since Sept 2005: 5%-10 %
Projected increase to Sept 2007: 5%-7%

Market view: Two years ago, news that classic one-bed flats around Leith Walk and Easter Road were fetching £96,219, an increase on 2003 of 24.2%, sent alarm bells ringing. It seemed that, for the first time, there were serious affordability concerns for first-time buyers in Edinburgh East. A year on the same flats were fetching £89,686 — a drop of 6.79% — and concern focused not on the fact that first-time buyers were being priced out, but that the bubble would burst. It was a worry that proved unfounded, as in the second quarter of this year the average price of a one-bed flat in Leith rose by almost 23% to more than £110,000, recovering the deficit — and more — of the previous 12 months. As a result, local doom-mongers are turning their attention to Leith’s harbour, which appears to be caught in the tide of a market switching from an investor-led focus to one catering for owner-occupiers.

Where price was the variable driving demand before, quality is now the key, leading sage minds such as Sandy Burnett of Murray Beith Murray to worry if Leith’s waterside adventure might hit the rocks in the short term on the back of a wave of significant oversupply.

“I tend to say the smaller the development the better the investment, but there is too much competition at the waterside and too much similar stuff being released,” says Burnett. “It’s also very early days and the development hasn’t proved itself for investment or occupation. Owner- occupiers will be put off by the fact that the necessary infrastructure of shops and facilities isn’t yet in place and there are simply safer investment opportunities in the traditional sectors.

“There isn’t enough of a margin to merit a speculative purchase at the prices that are being quoted. So it’s very much a watching brief required.”

New 1-bed apartment September 2005: £125,000 September 2006: £131,000 September 2007: £135,000

Second-hand 1-bed apartment September 2005: £117,000 September 2006: £123,000 September 2007: £130,000

New 2-bed apartment September 2005: £157,000 September 2006: £166,000 September 2007: £169,000

Second-hand 2-bed apartment September 2005: £150,000 September 2006: £163,000 September 2007: £171,150

Ex-council 3-bed September 2005: £128,000 September 2006: £138,000 September 2007: £148,000

Second-hand 3-bed semi September 2005: £157,000 September 2006: £165,000 September 2007: £179,000

Second-hand 4-bed semi September 2005: £180,000 September 2006: £200,000 September 2007: £222,000

Second-hand 5-bed semi September 2005: £190,000 September 2006: £200,000 September 2007: £230,000

2-bed cottage September 2005: £154,000 September 2006: £168,000 September 2007: £184,000

Town house 4 bed September 2005: £250,000 September 2006: £270,000 September 2007: £290,000 (Sources: Warners, Regent Estates)

Edinburgh North

Median price at August 2006: £239,340
General increase since Sept 2005: 8%
Projected increase to Sept 2007: 8%-10%

Barnton, with its blue-chip homes with secluded drives and extensive grounds, certainly has properties that were they for sale today would fetch £5m on the private market. However, as with most Scottish premium sectors, areas like Barnton are sellers’ markets where price is governed by scarcity — the simple fact is that after reaching the relative pinnacle of the Edinburgh property ladder, there are little or no superior Scottish locations for these exalted homeowners to aspire to.

Featuring the likes of Trinity, Murrayfield and Cramond as well as Barnton, Edinburgh North is home to the city’s greatest concentration of million-pound homes, and as we sit on the threshold of Edinburgh’s first £5m des res, it seems quite incongruous that Scotland’s biggest sale of 2004 was a “mere” £2.2m paid for No 11 Barnton Avenue.

Yet that figure is an instructive one. As if proof were ever needed that the capital is simply streets ahead of its rival Glasgow when it comes to real estate, two years after that Barnton Avenue sale, Glasgow is only now approaching its first £2m home sale in the leafy suburb of Bearsden.

But it’s not all exponential gains in Edinburgh. As elsewhere, middle-class families are feeling the strain of trading up to the £250,000-£350,000 bracket that sits just above the stamp duty threshold.

With Scottish families now spending as much as 40% of their earnings on home-related outgoings, there is little latitude for quality-of-life decisions in the capital. Stay-at-home mums are the exception rather than the rule and Edinburgh is now a solidly two-income city.

In a similar vein, extending homes and cheap borrowing has become the preferred option of families priced out of trading up to a larger family home in the capital.

The property market has made Edinburgh citizens wealthy, but few would dispute that they’ve had to work for their money and that their paper wealth has come with a social cost in terms of quality of life.

For those searching for the few crumbs of value left in Edinburgh North, the area to look at is Trinity, according to Sandy Burnett of Murray Beith Murray.

“Next to Murrayfield, Morningside and The Grange, which are its direct competitors, you probably get more for your money pound for pound in Trinity — as much as £100,000 for comparable homes in some cases,” he says.

New 1-bed apartment (Trinity) September 2005: £130,000 September 2006: £130,000 September 2007: £133,000

New 2-bed apartment (Trinity) September 2005: £160,000 September 2006: £165,000 September 2007: £170,000

Second-hand 2-bed apartment (Carrick Knowe) September 2005: £130,000 September 2006: £135,000 September 2007: £140,000

Second-hand 4-bed semi (Murrayfield) September 2005: £640,000 September 2006: £650,000 September 2007: £670,000

Second-hand 4-bed detached (Murrayfield) September 2005: £870,000 September 2006: £890,000 September 2007: £925,000

2-bed cottage (Ratho) September 2005: £155,000 September 2006: £155,000 September 2007: £158,000

4-bed town house (Barnton) September 2005: £400,000 September 2006: £400,000 September 2007: £400,000 (Sources: Anderson Strathern, Stewart Saunders)

Edinburgh South

Median price at August 2006: £234,657
General increase since Sept 2005: 8%
Projected increase to Sept 2007: 8%-10%

The Grange, long popular with the capital’s legal, financial and entrepreneurial sets, is the jewel in the crown thanks to its beautiful period villas, cobbled, big villas and “ruralised” set pieces.

The most famous Grange resident is undoubtedly The Royal Bank of Scotland supremo Fred “the shred” Goodwin, whose children follow the well-trodden path to attending the popular George Watsons private school. The Afshar brothers of the upmarket developers AMA are also Grange residents. In general, Edinburgh South revels in its pre-established social circuit with upmarket facilities.

While Edinburgh’s premier buyers continue to seek privacy, prestige and safety in numbers in the capital’s established bluechip postcode locales, the South Edinburgh landscape is also dotted with a patchwork of less developed warmspot locations.

Last year we warned that the likes of Polwarth and Blackford might experience a ceiling on their ambitions in 2006, and in the case of Polwarth at least house price rises appear to have mirrored increases in salaries.

We can expect similar in 2007 as Edinburgh settles into what is effectively a two-tier marketplace — expensive local enclaves on the one hand, and on the other stellar pockets of international-class real estate accessible only to the super wealthy.

New 1-bed apartment (Morningside) September 2005: £117,000 September 2006: £130,000 September 2007: £135,000

Second-hand 1-bed apartment (Polwarth) September 2005: £131,000 September 2006: £133,000 September 2007: £135,000

New 2-bed apartment (Polwarth) September 2005: £189,000 September 2006: £191,000 September 2007: £195,000

Second-hand 2-bed apartment (Comiston) September 2005: £204,000 September 2006: £215,000 September 2007: £220,000

Second-hand 3-bed semi (Liberton) September 2005: £486,000 September 2006: £486,000 September 2007: £495,000

Second-hand 4-bed semi (The Grange) September 2005: £832,000 September 2006: £900,000 September 2007: £925,000

Second-hand 5-bed detached (Morningside) September 2005: £991,000 September 2006: £1.2m September 2007: £1.3m

4-bed town house (Morningside) September 2005: £506,000 September 2006: £540,000 September 2007: £550,000

4-bed town house (Blackford) September 2005: £350,000 September 2006: £380,000 September 2007: £400,000

Ex-council 3-bed (Newington) September 2005: £150,000 September 2006: £165,000 September 2007: £175,000

Second-hand detached 5-bed (Balerno) September 2005: £480,000 September 2006: £495,000 September 2007: £500,000

Second-hand 4-bed semi (Balerno) September 2005: £200,000 September 2006: £230,000 September 2007: £230,000

Second-hand 3-bed semi (Currie) September 2005: £200,000 September 2006: £230,000 September 2007: £230,000

4-bed town house (Blackford) September 2005: £400,000 September 2006: £450,000 September 2007: £450,000 (Sources: Menzies Dougal, Anderson Strathern, Knight Frank, Stewart Saunders)

Edinburgh West

Median price at August 2006: £122,102
General increase since Sept 2005: 8%
Projected increase to Sept 2007: 8%-10%

Yet, even here, records are being broken. The classic one-bed flat in Gorgie — typically a barometer of first-time-buyer affordability for Edinburgh agents — has now breached the £100,000 barrier, placing it out of the reach of many of its traditional purchasers.

Housing developments over recent years in Currie, Balerno and Juniper Green, have ensured that there is a steady supply of new executive homes on tap in areas that some aruge are the most ‘home countiesesque’ of all Scotland’s suburbs. Colinton too has expanded enormously in the past decade.

According to John Christie of chartered surveyors Graham and Sibbald, the medium-term prospects for Edinburgh West look pretty rosy, despite the obvious affordability concerns.

“The siting of The Royal Bank of Scotland’s world headquarters at Gogar guarantees that both prices and buy-to-let yields for flats in this sector will be buoyant for the foreseeable future.

“Close to the stamp duty threshold of £250,000 we’re seeing the slowest growth, but after a spell when the market paused for breath 18 months ago, prices are rattling on again and demand has recovered to pre-2005 levels,” says Christie.

Last year David Alves of Stewart Saunders predicted those looking to enter the market or invest in buy-to-lets here had a limited window of opportunity.

With Edinburgh West regaining its previous upward momentum once again, Alves’s prediction has been proved correct.

New 1-bed apartment (Gorgie) September 2005: £120,000 September 2006: £120,000 September 2007: £120,000

Second-hand 1-bed apartment (Gorgie) September 2005: £92,500 September 2006: £100,000 September 2007: £105,000

New 2-bed apartment (Dalry) September 2005: £147,500 September 2006: £150,000 September 2007: £160,000

Second-hand 2-bed apartment (Dalry) September 2005: £140,000 September 2006: £150,000 September 2007: £160,00

Ex-council 3-bed (Saughton) September 2005: £115,000 September 2006: £140,000 September 2007: £150,000

Second-hand 3-bed semi (Corstorphine) September 2005: £255,000 September 2006: £270,000 September 2007: £285,000

4-bed modern town house (Carricknowe) September 2005: £240,000 September 2006: £240,000 September 2007: £240,000 (Sources: Graham and Sibbald, Anderson Strathern, Stewart Saunders)