Dundee settles comfortably in to a seller’s market

It is a reassuring economic indicator for a city when its housing activity is in positive territory, and Dundee now appears to be particularly well-positioned as it remains in the throes of a strong seller’s market.

The definition of a seller’s market is a situation wherein sellers are outnumbered by buyers by a big margin and the quantity of homes available for sale becomes far less than the quantity demanded.

This is where we are now in the City of Discovery, with the consequence that those homes which are coming on to the market are selling promptly, with many going to a closing date – always a heartening sign.

Prices are holding up as well, and there are even a few silly offers from people desperate to secure the home of their dreams at any cost. But in general, offers are being pitched at a sensible, and acceptable, level.

As in many parts of Scotland, scarcity of supply is the limiting issue, and it is exacerbated in Dundee by the fact that it is very much a settled area and people, once established, don’t move unless they have to.

Of course there is high turnover at the lower end of the market, in starter and student flats for instance, but once Dundonians have made the traditional journey from flat to semi or terrace and then to their own detached house, they tend to then stay put.

This is especially the case in the more sought-after areas such as Broughty Ferry, Monifieth and the West End of the city, with its attractive views over the river and the bridges.

Another factor in the market’s enthusiasm is that the city remains the home of one of Western Europe’s most extensive and transformative waterfront projects and one of Scotland’s biggest waterfront regenerations, centred on the V&A Museum of Design Dundee, which is due to open in 2018.

The city has tended to shrug off external events such as the oil price collapse which has had such debilitating consequences for Aberdeen, though towns to the north such as Brechin and Montrose have been hit by the knock-on effects as well as the punitive taxation charges on buy-to-let properties.

Ongoing uncertainties such as the Brexit negotiations and the possibility of another bite at the Scottish independence referendum have not caused undue uncertainty, though there has been a discernible hesitancy in the market.

Nor have the huge tax charges at the upper end of the Scottish Government’s Land and Buildings Transaction Tax (LBTT) had the same dampening effect as in other Scottish cities.

Although the really high LBTT surcharge kicks in 10% for homes between £325,000 and £750,000, high-end homes in Dundee tend to hover more around the £400,000 mark, with only a few rare properties in Broughty Ferry or rural areas commanding more than £600,000 to £700,000.

New build activity is proceeding briskly at both extremities of the city in the Western Villages development at the Western Gateway and at Monifieth to the east – and even as far out as Carnoustie.

National developers such as Wimpey, Kirkwood Homes, Miller Homes and DJ Laing all have plans to develop around Monifieth, Broughty Ferry and Carnoustie.

In the city centre, one-bedroom flats are still languishing behind the heady pricing of 2006/7, just before the collapse, and attract a wide range of offers, from £50,000 to £100,000 depending on location.

Three-bedroom semis of relatively recent construction have a fair after-market, achieving prices of between £150,000 and £200,000, again dependent on the area. Stone-built detached homes in the West End – those which have not been sub-divided – can be sold for £400,000 to £600,000.

The biggest problem is getting houses on to the market, but it is a very healthy sign that those that do enter the market in good condition, in good locations and at the right price are selling in days.

Bob Fraser is residential Director at the Dundee offices of DM Hall.

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