The research also shows that whilst prime sales have risen, new supply has outweighed demand over the last three months, with the number of available properties above £500,000 in Scotland reaching its highest level since 2016.

Faisal Choudhry, director of residential research at Savills, said: “Resilience across Scotland’s equity-driven prime residential market continued during the second quarter of this year. There was a 9% increase in net agreed sales above £500,000 compared to the same months last year.”

Cameron Ewer, head of Savills Scotland residential sales, added: “Despite strong demand levels, more choice for buyers against a backdrop of higher interest rates and market uncertainty is applying downward pressure on prime Scottish prices. Values have dropped slightly in recent months, but they are still 16.2% higher than at the beginning of the pandemic more than three years ago.”

A closer look at different prime markets within Scotland shows that the biggest pressure on prices is in those markets that are most dependent on mortgage lending, such as flats in urban locations. The upper end of the market, which is primarily driven by cash buyers, continues to attract strong interest and premiums for realistically priced homes.

There also continues to be strong demand for family homes in Glasgow’s hotspots of Newton Mearns, Pollokshields and the West End, pushing prime Glasgow prices up slightly by 0.8% compared to the second quarter of 2022, according to the research. In Edinburgh meanwhile, where overall stock levels have increased, there is strong demand for family homes up to £1.2 million and trophy homes above £5 million.

Outside the cities, constrained supply is still an issue in some country areas according to the report, although prices have dropped for larger homes in rural areas.

“Scotland’s country areas continue to witness ongoing demand for best in class properties, modern homes and older properties that have been refurbished. There is still an appetite for green spaces, gardens and especially views, in particular waterfront and sea views and proximity to major travel routes which can add a significant premium to values”, added Cameron Ewer.

Looking ahead, the prime Scotland market is likely to see further pressure on pricing due to mortgage rates accelerating and increased price sensitivity, particularly, in markets which are more reliant on borrowing. Appropriate pricing will be key for sellers to generate interest according to Savills.

As Faisal points out: “With stock levels continuing to rise, sellers who are realistic on pricing will continue to command the most interest and, ultimately, achieve the best prices.”

According to Cameron: “During the second quarter of 2023, the number of buyers registering with Savills to find a prime Scottish home was up 12% on the same months in 2022 and 128% on the pre-pandemic 2019 level.”