Scotland has seen a positive residential development market in the first half of the year, with a significant uptick in viewings and reservations.
This trend aligns with improvements across the UK's new homes market, where site visits and weekly sales rates among the top housebuilders have reached their highest levels in two years.
Savills recent findings highlight notable gains in several Scottish regions, reflecting a renewed confidence in the market.
Faisal Choudhry, Head of Residential Research in Scotland at Savills, commented on the latest market dynamics: "Following stabilisation of the mortgage market, Scotland’s residential development sales is experiencing a resurgence. The uptick in activity we’re seeing mirrors the positive trends across the broader UK new homes market. Locations such as Edinburgh, the Lothians, Falkirk, Ayrshire, Dundee, and Angus have outperformed in agreed sales across all sales, including new homes, while Glasgow, Lanarkshire, and Stirlingshire have shown modest growth. Despite challenges in Aberdeen's second-hand market, the incentivised new build sector has gained traction, increasing its share of transactions last year."
This improvement in market conditions can be attributed to greater stability in mortgage debt costs and a moderation in inflation rates. However, lending rates remain somewhat unsettled, continuing to pose constraints on new home sales. Choudhry explained: "The stabilsation in mortgage rates and easing inflation have contributed to improved market conditions, but lending rates still haven't fully settled, presenting a constraint for new home sales. The use of incentives, such as contributions towards mortgage payments, deposits, and Land and Buildings Transaction Tax along with upgraded specifications, are playing a crucial role in driving sales."
The survey of buyers and sellers conducted by Savills reveals shifting priorities post-pandemic, with fewer people working from home and a renewed focus on attributes like square footage and bedroom numbers, especially for budget-constrained upsizers.
While the importance of garden and outdoor space has lessened, private amenity areas for flats remain a key selling point. Running costs, particularly energy consumption, have become increasingly important for buyers: "Energy efficiency has emerged as a significant consideration for buyers, benefitting the new homes market. Our analysis indicates that purchasing a new build can lead to an average 27% saving on annual core energy costs compared to second-hand homes in Scotland. Moreover, nearly half of buyers with electric vehicles or plans to purchase one view the presence of a charging point as a desirable feature. Since June 2023, new homes in Scotland are required to have at least one charging point, which is adding to their appeal.”
Commenting on the uptick in residential sales, Carole Mackie, Head for Residential Development Sales in Scotland said the new build market had been attracting a wide range of buyers. She said: “The uptick in new build sales in particular has been driven by a number of factors including realistic pricing and the incentives being offered by developers, such as LBTT and interiors packages. The Bank of Mum and Dad is still supporting younger buyers: in this economic climate, new builds are often considered a comparatively straight forward and good value purchase, bearing in mind things like fixed prices and warranties, and the fact they come ready-decorated and with modern fixtures and fittings. Research also shows they are cheaper to run.”
