Median price at August 2006: £264,772
General increase since Sept 2005: 8%
Projected increase to Sept 2007: 5%

Market view: A year ago the Edinburgh Solicitors’ Property Centre reported that, despite buoyant annual growth of 13.2%, a chilly breeze could be entering Scotland’s hottest property market. With 54% of ESPC properties being offered for sale last summer at fixed prices, the average house price in Edinburgh actually fell momentarily by 0.36% to £213,590.

Not surprisingly, after 8 years of spectacular growth in the capital, 2006 has been a year of consolidation, according to Peter Lyell of Savills. “There’s been particularly high demand in the £600,000-£800,000 family-home bracket and high returns lower down the scale, but the top end has been slightly slower than previous years.”

In the city centre, the likes of AMA, Applecross and Sundial continue to set new price records for their upmarket conversions and newbuild developments. At Sundial’s quintessential “new New Town” development in Brunswick Street, agents reported sales of a three-bed duplex for £395,000 this year. Sundial, which also developed Albany Street, is seen as the prime movers in kick-starting the new New Town trend and that is reflected in the desirability of their product.

While Sundial boasted a remodelled Georgian two-bed apartment sale of £345,000 in the street, comparable properties nearby were trading for about £180,000 in Februaury.

Proving that Edinburgh’s experienced home buyers will only open their wallets for the right homes in the right locations, in Edinburgh’s periphery the market for unvariegated newbuild homes is stagnant. Lyell says: “Edinburgh’s market always sorts itself out in chunks. With the £600,000-plus sector having grown this year we can expect a knock-on effect further up the scale next year.

“One factor possibly affecting the most expensive sectors of the market in the capital are the bonuses being given out in London’s financial sector. With so much money swilling around in London, buyers are perhaps putting off a relocation move to Scotland. We actually see our biggest price gains here directly after a London boom rather than during it, so for now buyers can afford to be choosy and often look at as many as 10 properties before committing themselves.

“At the height of our boom they’d have been able to view a fraction of that number, such were the levels of demand here.” Still, despite the slowdown, Knight Frank’s John Coleman claims that big sums are changing hands, typically in private sales. “Knight Frank raised the bar in Edinburgh this year, trumping the previous record sale of £2.75m set in 2004 with the capital’s first £4m house this year. These are the kind of sums you’d expect to pay in London, but we believe there is a lot of money in our system and there are as many Scots as international buyers able and willing to spend that kind of money in Edinburgh.” Incredible as it sounds, there could still be some growth in Scotland’s most exposed market.

New 1-bed apartment (Haymarket) September 2005: £140,000 September 2006: £145,000 September 2007: £155,000

Second-hand 1-bed apartment (Stockbridge) September 2005: £174,000 September 2006: £175,000 September 2007: £180,000

New 2-bed apartment (Stockbridge) September 2005: £190,000 September 2006: £200,000 September 2007: £210,000

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