Scotland was the strongest-performing part of the UK for the “prime” housing market in the third quarter and over the last year, a survey has revealed.

Property agent Savills, which has published the research today, says the prime market is “broadly defined by the top 5% to 10% of homes by value”, with this translating to above approximately £500,000 in Scotland.

It described Scotland as the “standout performer” in the prime housing market, with prices down a “marginal” 0.1% in the third quarter and “just” 1.1% lower year-on-year.

These are much smaller falls than the 1.5% quarter-on-quarter and 5.2% year-on-year drops in prices in the overall UK prime housing market.

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Savills observed its latest analysis “reveals that the prime city market of Glasgow has experienced the most robust growth of any Scottish location so far this year, with 0.5% growth in the nine months to September 2023”.

It said of the overall UK prime housing market: “Values remain 10.5% above their pre-Covid level thanks to the exceptional market conditions of the past two-plus years.”

Savills added: “In Scotland, at a different point in the cycle, that figure is plus-16.1%.”

It noted a £1m home in March 2020 was now worth £1,105,000 “as a UK average”, and £1,161,000 in Scotland.

Faisal Choudhry, director of Savills’ residential research in Scotland, said: “The mainstream market on both sides of the border is more exposed to affordability pressures and higher costs of commuting, amongst other factors.

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"Whilst mortgages are beginning to settle, there is no doubt that mortgage-free and low loan-to-value purchases have been supporting the market in recent months, accounting for a larger share of all transactions in the face of rising borrowing costs. We anticipate this to continue in the medium term”.

Cameron Ewer, Savills’ residential head in Scotland, said: “Despite external economic pressures, and a more uncertain market elsewhere, Scotland’s prime housing market is proving to be largely stable, with little change in prices so far this year and some standout market performances.”

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He added: “A demand versus supply imbalance for appropriately priced, well-presented homes in key locations is leading to competitive bids in many key areas. Scotland is now the most…searched-for location on Savills’ website outside London, attracting buyers with deeper pockets from all over the UK and global locations. This is adding to the competition for Scotland’s properties for sale.

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“However, buyers are currently highly selective and discretionary, meaning realistic pricing is now the key to getting a sale over the line. In addition, challenges being presented by chains are becoming a more regular feature of the market on both sides of the border, with blockages caused by mortgage funding issues impacting sales further up the transaction.”

Savills noted the Conservative Government’s mini-Budget of September 2022 “signalled an end to more than two years of strong house price growth across the UK’s prime markets”.

It observed: “Since then, rising interest rates and wider inflationary pressures have chipped away at buyers’ budgets, particularly those dependent on borrowing.”

Savills added: “Prime markets across the UK are underpinned by both deep reserves of equity and relatively constrained stock levels in many locations, so values remain on average 10.5% up on March 2020 across the UK. In Scotland, which emerged later from the pandemic restrictions, house prices in prime markets are 16.1% higher than in March 2020.”