Even the most eye-watering prices paid for Scottish property pale in comparison to parts of London, San Francisco or Hong Kong. A million pounds in Scotland will get you a long way — a mansion with land in Perthshire or most of a townhouse in Edinburgh — while the same sum may only stretch to a one or two bedroom flat in the world’s most salubrious neighbourhoods. And yet the prime market north of the border has proved to be an unexpected success story over the past 12 months. Fuelled by the housing theme of the pandemic — wealthy buyers moving out of the English capital — price growth in Scotland’s prime market is set to rocket over the next five years.
Between now and 2025 the average price of a prime property (defined as more than £1 million) will grow by 22.8 per cent compared to the UK average of 20.5, according to research from estate agency Savills. This poses the question: why? Perhaps buyers have been watching too much Outlander and want a big baronial castle in a remote location. Jamie Macnab at Savills says 2020 was one of the busiest ever years for his country houses team. I can well believe it. But when I speak to other agents it seems that Edinburgh is a serious rival to the success of Scotland’s prime rural market. Between March 2020 and March 2021 house prices rose by up to 17 per cent in the Scottish capital.
A journalist I follow on Twitter revealed that a friend of his had recently sold an Edinburgh flat for more than £100,000 over the home report value. I can’t help but think back to the bonkers months leading up to the 2008 financial crash. Buyers are assured that won’t happen again because lending conditions are different, but vast sums of money are sloshing around at the top end of the market and it feels a little unsettling. From the perspective of someone who will never have £100,000 to pay over the value of a flat, I wonder what that buyer expects from their new property. Or if it matters to them that they will almost certainly lose money.
I can understand the appeal of Edinburgh for the well-heeled. It is heartbreakingly beautiful in all weathers, a potent blend of grey stone, winding streets, heritage and culture. It is a rich city that will only get richer in years to come. What happens to that blend when the wealthy come to town? It changes irrevocably, of course. Already property developers are homing in on Rhubaba, an artist-run studio space on Leith’s Arthur Street, with plans to turn it into luxury flats. There are countless more affordable artists’ studios facing the same threat. It’s not just about art. It’s about the city’s delicate ecosystem as a whole, how its communities rub alongside each other and where public money is directed to. As money moves in, cultural spaces, libraries, independent businesses and social enterprises are battening down their hatches. For them the next five years will be a wild ride.