Demand for family homes drives growth in Scottish property values in fourth quarter

Farmhouses were the top-performing property type in the fourth quarter in Scotland, as buyers continued to seek more space and a new work/life balance after a series of national lockdowns.

Buyers from Scotland’s cities and from England looking for larger, family homes, pushed farmhouse values up by 0.3% in Q4 and 1.7% during the course of 2020.

Scottish Country House prices were flat overall in the fourth quarter, but annual growth of 0.8% is the strongest performance since June 2019. Much of the annual increase was fuelled by a busy third quarter, with activity high after the market reopened in Scotland on 29 June.

Property valued under £500,000 recorded an increase of 2% in the fourth quarter, taking the annual increase to 3.7% and making it the best performing price segment within the Scottish country house market.

The relative affordability of Scotland, where the average house price was £163,248 in October compared with the UK average of £245,443, meant many of the sales on the popular west coast of Scotland, including Waterfront, were sold for £500,000 or less to a mixture of owner-occupiers and second-home purchasers.

“We’ve seen some good deals this year and competitive interest at closing dates, which we haven’t seen for a few years. Lots of people still want to move out of town, either from the cities of Scotland or England, and there are positive signs that we’ll have a good supply of properties to sell next year,” said Tom Stewart-Moore, head of Knight Frank’s rural business in Scotland.

Activity since the market reopened in Scotland has been significantly above the five-year average. Offers accepted between 29 June and the end of November were up 44%. Viewings were up 70% and new prospective buyers up 53% in the same period. Instructions to sell increased 19% versus the five-year average, producing a market that has been much less seasonal than in previous years.

The Scottish Government introduced a Land and Buildings Transaction Tax holiday running until 31 March 2021 in July. The move has seen the level the tax in paid at raised from £145,000 to £350,000.