The belief that the top end of Edinburgh’s property market relies on buyers from outside Scotland is exaggerated, says Neil Harrison
While chatting to a friend who owns a property in Edinburgh’s New Town, I was introduced to a theory I would describe as the Booming Upmarket Residential Property Export Market (BURP-EM).
The theory is quite a simple one. BURP-EM states that properties in the top quartile of the property market are bought by someone from London or overseas, and the marketing of the property needs to focus on these areas. This friend was convinced that when selling their home it would be more important to be able to offer buyers a tipple of vodka, rice wine or a pint of Fuller’s London Pride rather than a nip of whisky.
The BURP-EM theory has its foundation in the London property market, where there are significant levels of foreign investment. Our marketing partner based on Park Lane in London, Fine & Country, sees on the ground the contribution of overseas investment in the London property market. All properties sold through that office since 2005 have been to foreign buyers (one of the reasons why we have a marketing partnership). However, like all good theories, it needs to be challenged, tested and either verified or rejected, particularly when you are looking at its relevance for the Edinburgh property market.
This is quite easily done, as all property transactions have to be recorded with Registers of Scotland. Included in the registration process is capturing the address of the buyer of the property, which allows us to map out where buyers are coming from.
Looking at the data for properties bought in the EH postcodes during 2012, we found that 80 per cent of homes were bought by somebody already living in the EH area. Eleven per cent of the time, the buyer came from elsewhere in Scotland, with 6 per cent from England, Wales or Northern Ireland. The overseas market accounted for 1.6 per cent of the market, with the balance being “unknown”.
However, since BURP-EM relates to the top end of the property market, it is important to analyse like with like and therefore exclude lower-value properties. Within this sector of sales, we divided the market into two: properties which sold for between £500,000 and £999,999, and those selling for more than £1 million.
While the profile of buyers does change as you move up the property market, it is important to note the scale of the change. To be completely fair, let’s classify half of the “unknowns” as non-Scottish buyers.
In the £1m-plus market, the non-Scottish buyers only account for 18 per cent of the sales. This drops to 11.5 per cent for homes between £500,000 and £999,999. The validity of the theory is grimmer if we remove the assumption that half of the unknown buyers live in Scotland already.
What is clear is that the booming upmarket residential property export market is a nice theory, but is not one that is backed up by the property transactions in Edinburgh.
Our property market continues to be a local one. This is why independent research highlights that when it comes to marketing a home for sale, local marketing services, such as those delivered by ESPC, are very important. A significant number of buyers still start the house search offline by using newspapers, showrooms and for-sale boards to find their next home.
And before you think ESPC would of course say this, I should point out that our profile of house hunters is more international than the market. In June, 7 per cent of visits to espc.com were from overseas and 29 per cent from England, Wales and Northern Ireland.
So it is certainly rude to oversell the BURP-EM market. In the words of my fourth-year physics teacher, “18 per cent is not a good score Neil, it is poor”.
Plus, I am pleased to report that the friend mentioned earlier recently sold their home. It was bought by someone who was already living in Edinburgh.
• Neil Harrison is head of marketing at ESPC