Upmarket property slump is blamed on unrealistic sellers

THE gulf in price between high-value Scottish homes and those in London and the south-east of England has “never been wider”, according to a new report.

Savills estate agency said the previously resilient prime market – properties worth between £400,000 and £1 million – slumped last year.

It blamed unrealistic sellers over-pricing property and less “London money” from people either moving from the city or looking for second homes or investments in Scotland.

This had led to the average value of properties on the Savills Prime Scotland Index being £589,225 compared to just over £3m on the Savills Prime Central London Index.

However, Rettie & Co said it had seen a resurgence in interest in homes worth more than £400,000 in Edinburgh and the Lothians in recent weeks, and believed the market could be about to bounce back. And Savills believes there is still plenty of interest in prime property that is priced realistically.

Faisal Choudhry, head of Savills Research in Scotland, said: “Prime Scottish property looks increasingly good value, but only when it is marketed at an appropriate price and this has already begun to attract the attention of London buyers this year. However, overpriced property has typically remained unsold, as buyers have become increasingly discerning and value driven.

“That has meant that the level of unsold stock on agents’ books has remained, which has suppressed price growth.”

There were 2,206 sales of homes between £400,000 and £1m in 2011, down from 2,355 the previous year, but still higher than the 1,709 in the slump of 2009. However, Rettie & Co has seen encouraging signs in recent months.

Director Tony Perriam said: “In the price bracket of £400,000 to £1m we’ve had an extremely busy four to six weeks. We’re 14 days into March and so far it’s been our busiest March in terms of viewings, but more importantly in terms of sales, since those dark days of 2009.

“We’ve put 19 properties under offer in those nine working days at an average sale price of £506,000.”

He said the £1m-plus sector had been quieter, but there was reason to hope the surge in activity may trickle up.

“In both sectors it’s all about confidence,” Mr Perriam said. “No-one thinks prices are going to rise, but it would appear no-one thinks they’re going to fall, either. We’re not absurdly optimistic, but we’re guardedly optimistic.”

Both Rettie and Savills also believe that sellers are finally becoming more realistic when setting prices. Mr Perriam said: “I would agree there were some unrealistic sellers in the market last year.”

Jamie Macnab, director in Savills’ Edinburgh office, added: “There seems to be an increasing acceptance that there is no point in setting value by reference to the abnormal conditions of the peak of the market.

“Realistic pricing is critical to achieving a sale in current market conditions and we are now seeing a wave of price reductions by agents across Scotland.

“This should result in increased transaction levels this year, with homes taking a shorter time to sell.”