Residential Property Review 2003 And The Outlook Ahead

9 February 2004

CKD Galbraith's Agency Department, operating from six offices across Scotland, is perhaps best placed of all Agents to gauge the performance of Scottish rural property in 2003 and predict the outlook for 2004.

CKD Galbraith’s Agency Department, operating from six offices across Scotland, is perhaps best placed of all Agents to gauge the performance of Scottish rural property in 2003 and predict the outlook for 2004.

For CKD Galbraith the future is well set. The merger has moved the firm forward quickly and we handled almost 50 per cent more rural residential property sales in 2003 than in 2002.

It has been a busy year for our newly merged firm in the first nine months of trading as CKD Galbraith and we have handled an impressive £76 million of rural property sales from premier sporting estates and farms to small country cottages, significantly more than the £51.5 million in 2002 that the combined firms of CKD Finlayson Hughes and Cluttons (Scotland) handled.

Rural residential property in 2003
In rural areas throughout the country, we sold 167 houses in 2003 for a total price of £46.5 million giving an average value per house of £271,500, an increase of some 41% over the equivalent value of £190,000 in 2002. This far outstrips the average increase of house prices in Scotland as a whole of 19.8%. Whilst perhaps only a small sample statistically, there is no doubt that the rural sector across Scotland was a “hotspot” in 2003.

The reasons for this are, we consider, fourfold. Firstly, there is an acute shortly of quality rural property in many areas, in particular, family houses with good accommodation and some land. Secondly, demand has increased significantly in regions where increasing affluence in urban centres and better road and rail links have been created. These include parts of the Lothians, Borders, Ayrshire, Aberdeenshire, Perthshire and Inverness-shire (where the population is expected to rise around 8% in 2004, bucking the overall trend in Scotland). Thirdly, there is a thriving leisure and lifestyle market, driven by demand for that special property or location where dreams nurtured over many hard working years can be realised.

Finally, there are buyers investing in second homes as holiday properties, both for their own pleasure and because they consider property to be a safer place for their money, perhaps, than other investments.

Prospects for 2004
The size of our mailing list suggests continuing strong demand for rural property and this is certain to be greater than the available supply this year. We predict continued demand for rural property with perhaps hotspots in the remoter parts of the Highlands and the West Coast, and the South West, where property is still relatively inexpensive in comparison to the more accessible areas close to Edinburgh, Glasgow and Perth. In 2002, 40% of the rural property we sold went to English and overseas buyers. Interestingly in 2003 the percentage has shrunk to 33% despite the overall growth in value. This, perhaps, reflects a quieter market in the South during part of the year and the strength of the market as a whole in Scotland with buyers relocating from Edinburgh and Glasgow to the country.

In 2003 the average purchaser paid 18% over the guide price for houses we sold. This has in fact changed little from the 2002 figure of 19%. There is however a striking divergence between the 30% over the asking price achieved where bids were received for the property at a closing date and the 13% where the sale was negotiated with a purchaser without a closing date being fixed. Of course there are many reasons why a closing date is not always the best solution but for those contemplating a sale in 2004, the difference in price that can be achieved, should give pause for thought. A prerequisite for success is keen interest from two or more prospective buyers. To achieve this, it is necessary to use an agent who can most effectively reach the most lucrative market possible, presenting the right selling points to the most appropriate market sector in the best possible way. An agent who understands the nuances of rural residential property sales in Scotland can make a huge difference to the price achieved.

The comments on 2003 from our network of local offices are as follows:

Bob Cherry (Ayr & Glasgow)
2003 was a very active year in which demand for country properties greatly outstripped supply in Glasgow and the West of Scotland. The upgrading of the A77, the main arterial road from Glasgow to Ayr, is opening up large parts of Ayrshire to Glasgow commuters with substantial price increases. Many farm steadings, formerly of little value, are now being considered for residential development. I expect this trend to continue into 2004.

John Bound (Inverness)
We anticipate an active property market with strong demand throughout the Highlands and Islands in 2004. Prices are being pushed higher by buyers from the South and the Central Belt wishing to relocate to the Highlands and other parts of the North for a change of lifestyle. There are also buyers looking for second homes, particularly in the scenic parts of the West coast.  We sold one West coast property this year for a staggering 86% over our guide price! Over 200 brochures were distributed for this property and twelve offers received at the closing date. Although we have seen an incredible rate of growth in property prices over the last two years, property still represents good value to buyers from the South where there is still a wide price differential and we consider the market still has some way to go.

William Jackson (Perth)
2003 will be remembered as an exciting year with a wide ranging number of rural property transactions from cottages to castles, farms to estates. CKD Galbraith has achieved a great number of sales in the area and is fast becoming the first ‘port of call’ for those wishing to locate in this district. I believe that the considerable appreciation in value, which was achieved during the last twelve months, is unlikely to be repeated, but equally unlikely to fall either. We have a strong and active list of purchasers, those who are keen to acquire a place in the area, but who have either missed out on other opportunities or have yet to secure a property. At this time of year we are able to broker these property transactions on a private basis, enabling a purchaser to acquire on a privileged basis, but also having to pay for that privilege!

Jonathan Kennedy (London)
CKD Kennedy Macpherson, CKD Galbraith's London consultants, specialise in the purchase and sale of sporting properties.

Interest in sporting estates throughout the UK in 2003 was strong. Certainly, as far as Scotland is concerned, there are a significant number of unsatisfied buyers from outside Scotland, often with English connections. The profile of the bank of prospective purchasers of sporting estates is remarkably similar in most cases. These tend to be self-made people, successful in business, but with a keen eye to fulfilling dreams and enjoying the rest of their lives.

Scotland, of course, is incomparable in terms of beauty and magnificence. I believe that there will be continuing demand for good estates in Scotland, particularly where quality sporting is available. The grouse moor market is as strong as ever and the desire of many people to own their own estate is more achievable in the first decade of the 21st century than it has ever been before. This is good news for the Scottish economy and for the communities who will benefit from the inflow of interest and funds.

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