Prime property prices in Edinburgh increased by 1.4% between March and the end of June, the strongest quarterly uplift in prices since 2013. Annual growth across the city market currently stands at 2%.

Price growth during the quarter was driven by a pick-up in demand, with the number of transactions completed by Knight Frank in Edinburgh 24% higher between April and June compared to the previous three months and more than 40% higher than in Q2 2015.

Viewings also increased by more than 50% between April and June versus the same period last year. This uplift in activity took place in spite of political uncertainty caused by the EU vote.

Edward Douglas-Home, Head of Edinburgh City Sales, said: “The property market in Edinburgh has had a rollercoaster last few years, with four major votes taking place since 2014 alone, culminating in the recent referendum on the UK’s continued membership of the European Union.

“In spite of this, the market has been busy during the first half of 2016, especially in the prime central areas of New Town and the West End where good quality houses and flats continue to attract high levels of interest.”

Higher purchase costs as a result of the introduction of Land and Buildings Transaction Tax (LBTT) remain a burden for some buyers, especially for homes valued between £700,000 and £1m, but the indication is that the prime market has started to adjust.

All eyes will now turn to the impact of the UK’s vote to leave the EU on the market. There is likely to be a period of political and economic uncertainty in the short to medium term and this has the potential to impact the housing market.

However, it is important not to overstate this. The primary drivers of the city market remain unchanged and these will continue to drive turnover once the initial dust settles. We will be keeping a close watch on key market metrics in the weeks and months to come.

RESIDENTIAL RESEARCH

PRIME EDINBURGH CITY INDEX Q2 2016

OLIVER KNIGHT Associate

“ The primary drivers of the prime Edinburgh market remain unchanged and these will continue to drive turnover once the initial dust settles.”

Follow Oliver at @oliverknightkf

For the latest news, views and analysis on the world of prime property, visit Global Briefing or @kfglobalbrief

ANNUALQUARTERLY

Sep

-15

Dec

-15

Mar

-16

Jun-

16

Jun-

15M

ar-1

5D

ec-1

4S

ep-1

4Ju

n-14

Mar

-14

Dec

-13

Sep

-13

Jun-

13M

ar-1

3D

ec-1

2S

ep-1

2Ju

n-12

Mar

-12

Dec

-11

Sep

-11

Jun-

11

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%Introduction of

LBTT (Apr 2015)

Source: Knight Frank Research

FIGURE 1

Edinburgh: annual and quarterly price growth Annual and quarterly price growth

ACTIVITY PICKS UP IN PRIME EDINBURGH MARKETStrong price growth during the previous quarter was driven by a pick-up in demand, which took place despite wider political uncertainty in the run up to the EU referendum.

Results for Q2 2016Prime property prices rose by 1.4% in Q2 2016, the strongest quarterly uplift in prices since 2013

Annual growth across the city market currently stands at 2%

Prime sales volumes were 24% higher between April and June compared to the previous three months, according to Knight Frank data

There are indications that the prime market has started to adjust to higher levels of property taxation

Source: Knight Frank Research

60

80

100

120

140

160

180

May

-16

Mar

-16

Jan-

16

Nov

-15

Sep

-15

Jul-

15

May

-15

Mar

-15

Jan-

15

Nov

-14

Sep

-14

Jul-

14

May

-14

Mar

-14

Jan-

14

Dec 2014:SDLT Reform

May 2016:Scottish Elections

Apr 2016:3% LBTTsurcharge

May 2015:UK General

ElectionSep 2014:Indy Ref

Apr 2015:LBTT

introduced Jun 2016:EU referendum

FIGURE 2

Prime stock levels Number of £750,000+ properties available for sale across Edinburgh

EDINBURGH CITY INDEX Q2 2016

“ The market has been busy during the first half of 2016, especially in the prime central areas of New Town and the West End.”

Edinburgh City Index Q2 2016

Edinburgh New Town/ West End

North South West

3 month 1.4% 2.3% 1.5% 1.0% 0.6%

6 month 2.1% 3.3% 2.1% 1.6% 0.9%

1 year 2.0% 3.4% 2.6% 1.2% 0.6%

3 years 11.5% 15.6% 9.6% 11.8% 5.7%

Source: Knight Frank Research

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RESIDENTIAL RESEARCH

UK Residential Market Update - June 2016

Economic and housing market overview The imminent EU Referendum is dominating the national debate. There are signs that the uncertainty over the outcome is having an impact on the economy, the financial markets and the currency markets, as well as some sectors of the housing market.

As we await the result however, here is the latest from the residential sector.

New data from HMRC shows a slight uptick in transactions in May, after the sharp fall in activity in April. As the chart below shows, this distortion in the market was due to the new stamp duty charge for additional dwellings introduced on April 1st, and it is not the first time that the market has reacted to stamp duty policy changes. However, it is worth noting, that despite the sharp fall, transaction levels are still higher than back in 2010, 2011, 2012 and much of 2013.

It has also been an interesting month for house price statistics, as after several years of work, a new UK-wide house price index has been released. This will replace both the ONS’s previous index and the Land Registry index plus Registers of Scotland. As can be seen from the charts opposite, the new index places the average UK house price at £209,000, slightly higher than the Land Registry index, but noticeably lower than ONS’s previous index. This is also

RESIDENTIAL RESEARCH

UK RESIDENTIAL MARKET UPDATE

“ There was an uptick in transactions in May after the sharp fall in activity in April. However, it is worth noting that despite the slowdown from April 1st, transaction levels are still much higher than in the five years following the 2008 financial crisis.”Follow Gráinne at @ggilmorekf

For the latest news, views and analysis on the world of prime property, visit Global Briefing or @kfglobalbrief

GRÁINNE GILMORE Head of UK Residential Research

MARKET ROUNDUPAverage UK house price growth eased slightly in May, while average prices across Greater London continue to register double-digit growth. In prime central London, prices are broadly unchanged on average, but some areas are still seeing price growth of more than 6%.

Key facts June 2016UK house prices rose 0.2% in May taking the annual change to 4.7%, down from 4.9% in April

Prime central London prices dipped 0.1% in May, and the average annual change is 0.1% in a highly localised market

Average UK rents rose by 2.6% in the year to April, with a 2.8% rise in England. Prime central London rents slipped by 2.3% on the year

Policy impacts on property transactions UK residential property transactions & UK house prices

Source: Knight Frank Research, HMRC, Nationwide

290300310320330340350360370380390400410

UK HOUSE PRICE INDEX (RHS)RESIDENTIAL PROPERTY TRANSACTIONS (LHS)

50,00060,00070,00080,00090,000

100,000110,000120,000130,000140,000150,000160,000170,000

Jan 2010Stamp duty exemption for

purchases under £175,000ends (pre-announced)

24 March 2012Stamp duty holiday for first-timebuyers ends (pre-announced)

April 1 2016Introduction of extra 3% stamp duty for

additional properties (pre-announced)

May 2015General Election

Pri

ce In

dex

Mon

thly

Tra

nsac

tions

201620152014201320122011201020092008200720062005

How the indices compare By price (England & Wales)

£100,000

£150,000

£200,000

£250,000

£300,000

£350,000

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

New UK HPIPrevious ONS HPIPrevious Land Registry

How the indices compare By annual price growth (England & Wales)

Source: Knight Frank Research

-20%

-15%

-10%

-5%

0%

5%

10%

15%

New UK HPIPrevious ONS HPIPrevious Land Registry

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

close to the Nationwide’s average price of £204,000. In terms of annual growth, the indices all show broadly the same trend.

KnightFrank.co.uk/rural

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Issues and insights Threats and opportunities for landowners

Rural property markets Our latest research and analysis

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KnightFrank.co.uk/rural

The Rural Report - Spring 2016

Important Notice © Knight Frank LLP 2016 – This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.

RESIDENTIAL RESEARCH

Liam Bailey Global Head of Research +44 20 7861 5133 liam.bailey@knightfrank.com

Oliver KnightAssociate+44 20 7861 5134 oliver.knight@knightfrank.com

EDINBURGH SALES

Edward Douglas-Home +44 13 1222 9606 edward.douglas-home@knightfrank.com

PRESS OFFICE

Jamie Obertelli+44 20 7861 1104 jamie.obertelli@knightfrank.com

2016

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