Scotland’s new homes market booms in first half – Savills

Scotland’s residential development market has experienced a positive start to the year, with a notable increase in viewings and reservations, as reported by Savills. This trend mirrors the overall improvements seen in the UK’s new homes market, where housebuilders are witnessing the highest site visits and weekly sales rates in two years. Savills’ recent report highlights significant gains in various Scottish regions, indicating a renewed sense of confidence in the market.

According to Faisal Choudhry, head of residential research in Scotland at Savills, the stabilisation of the mortgage market has led to a resurgence in residential development sales in Scotland. He notes that areas like Edinburgh, the Lothians, Falkirk, Ayrshire, Dundee, and Angus have excelled in agreed sales, including new homes, while Glasgow, Lanarkshire, and Stirlingshire have shown modest growth. Despite challenges in Aberdeen’s second-hand market, the new build sector has seen increased activity, capturing a larger share of transactions.

This boost in market conditions can be attributed to greater stability in mortgage debt costs and a slowdown in inflation rates. However, lending rates remain somewhat unsettled, which continues to impact new home sales.

Mr Choudhry explains, “The stabilisation in mortgage rates and easing inflation have contributed to improved market conditions, but lending rates still present a constraint for new home sales. Incentives, such as contributions towards mortgage payments, deposits, and Land and Buildings Transaction Tax, as well as upgraded specifications, are crucial in driving sales.”

A survey conducted by Savills among buyers and sellers reveals changing priorities post-pandemic, including a decreased focus on working from home and a renewed interest in factors like square footage and bedroom numbers, especially for budget-conscious upsizers. While the importance of garden and outdoor space has diminished, private amenity areas for flats remain a significant selling point. Buyers are increasingly considering running costs, specifically energy consumption, when making purchasing decisions.

Mr Choudhry adds, “Energy efficiency has become a key consideration for buyers, benefiting the new homes market. Our analysis indicates that purchasing a new build can result in an average 27% saving on annual core energy costs compared to second-hand homes in Scotland. Additionally, almost half of buyers with electric vehicles or plans to purchase one view the presence of a charging point as a desirable feature, further enhancing the appeal of new homes.”

Carole Mackie, head of residential development sales in Scotland, notes that the new build market is attracting a diverse range of buyers. She attributes the rise in new build sales to factors such as realistic pricing and incentives offered by developers, like LBTT and interiors packages.

She states, “The surge in new build sales is driven by various factors, including competitive pricing and developer incentives. In the current economic climate, new builds are often seen as straightforward and good value purchases, considering aspects like fixed prices, warranties, pre-decorated homes, modern fixtures, and fittings. Research also indicates that new builds are more cost-effective to run in the long term.”