Sibling Rivalry

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25 September 2009

Sibling Rivalry

There have been many famous rivalries through history; Ali vs. Fraser, Gladstone vs. Disreali, Scott vs. Amundsen, Gordon vs. Tony...er...Tom vs. Jerry...so the recent comments of Steven Purcell, regarding the Glasgow Airport Rail Link and now the refurbishing of Dalmarnock Station, have once again blown a chill wind between the auld rivals of Glasgow vs. Edinburgh; Is Glasvegas really 'Miles Better', how many Edinburger's does it take to change a light bulb and what is the first question at a Glaswegian pub quiz?

In the current economic climate government spending is increasingly subject to scrutiny, especially as the trust we have for our leaders is still wanting. The high costs of infrastructure projects are not insignificant and ever since the Parliament overspend they have been a mainstay in the headlines, after all, the £2bn budget for the Forth Crossing could pay for almost every house bought in Edinburgh last year and the £160m for the Glasgow Rail Link could buy over 1,000 'average' homes in Glasgow (these figures are based on the hopeful presumption that these projects remain within budget; who knows what the tram line will end up equating to).

The differences between Edinburgh and Glasgow are significant and reflect the identities, heritage and economic legacies of each city; however, in recent times both cities have found importance as global economic centres, perhaps refocusing their competition once again. This successful rivalry has seen Edinburgh and Glasgow become the only UK cities, outside of London, to make the top 50 of the Global Financial Centres Index despite both slipping down the list this year, Edinburgh to 27th from 20th and Glasgow to 49th from 41st. With a foot either side of Harthill there is occasionally some playful banter between our Glasgow and Edinburgh offices but given the relighting of this auld debate and our overview in both markets, perhaps now is a good time for some property market Top Trump style competition.

According to the Registers of Scotland, Edinburgh had seen a 9.7% year-on-year drop in average house prices to Q2 2009, slightly more than the 9.3% retreat reported in Glasgow; round one to Glasgow. However, the Registers of Scotland figures also show that transaction volumes have fallen further in Glasgow, down 50.1% compared to 47.6% in Edinburgh; (one all). The graph below illustrates the similar experience of Glasgow and Edinburgh's urban areas, excluding suburbs, with Glasgow showing a slower start to the year in terms of average price but then better performance in terms of sales volumes; (Glasgow 2: Edinburgh 2).

The Rental Market

So with the scores tied after the overall market figures maybe the rental market will be able to decide who takes top honours.

According to Citylets the average rent for a two bed flat in Edinburgh (£645 pcm) is £75 higher than that in Glasgow (£571pcm); (Edinburgh 3: Glasgow 2). In both Edinburgh and Glasgow rental values have weakened into Q2 due to strong supply, however, Glasgow rentals remained more robust during this period (3 all). Our rental teams have seen a subsequent firming and increase in our average two bed rental in Edinburgh with it now standing at circa £780 up from £640 in Q2; this may be attributable to changing stock profiles as potential vendors consider their options.

The Prime Market

So with nothing between them so far, if we are to settle the auld debate once and for all we will have to consider the best that both cities have to offer.

In the blue corner (or should that be that green and white corner) Charles Wilson's Woodhill Development, comprising The Park, has been described as some of the finest architectural planning of the 19th century...and in the East Stand is James Craig's New Town, described as a masterpiece of 18th century town planning. Both these areas provide highly sought after historical exemplars of their respective cities application of the Italianate and Neo-classical architectural styles to celebrate their global importance as the Second City of the Empire and home of the Scottish Enlightenment respectively.

Both these areas have seen approximate price retreats of circa 10-15% from peak levels and using the G3 6 and EH3 6 postcodes as rough boundaries we can see that from the peak of the market the New Town has seen a greater retreat in transaction volumes compared to The Park, down some 66% compared to 54% (Glasgow 3: Edinburgh 2), however, since the start of the year the resurgence in the New Town has seen this volume increase by over 71% compared to The Park's 33% (3 all).

So with the statistics at a draw, by pure coincidence I assure you, and because I fear the only way to separate the two would be in the form of duel between Tony Perriam our Director of Residential in Edinburgh and Geoff Lockett, Associate Director in our Bath Street Office (both former Black Watch men so it could be a lengthy affair) we can only conclude that both cities are of equal merit.

Supporting this diplomatic conclusion of equality is our experience in both the Edinburgh and Glasgow markets, of the continued return of mainly family buyers, believing that the worst of the price retreat is behind us, looking for quality stone built property in traditionally desirable locations for between £300k to £750k. These buyers are less affected by credit constriction having often built up a more significant equity reserve from a number of previous housing transactions therefore enabling them to accept the drop in value of their own home in order to trade up, securing a larger discount on their next home.

So hopefully having managed to navigate to the end of this comparison while still being able to step foot in both cities, the truth is that we all know which city is better...Glasgow, I mean Edinburgh, no Glas...

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