The housing market in Scotland had a reasonably strong 2017 and the start of 2018 looks like a continuation of this trend. House prices are basically rising because there is much more demand than there is supply. This is particularly evident in Edinburgh and Glasgow, where average house prices rose by 6-8% over the last year alone. In some core Edinburgh postcodes, there has been double digit rent price inflation. Despite downside economic and political risks going forward, this picture does not look likely to change much over the next few years. Our current forecasts suggest house price growth in Scotland of around 19% over the next 5 years.
Dr John Boyle
Director of Research & Strategy
Scottish Residential Market Review
- The rise in house prices experienced across Scotland in 2017 (when they rose 4% overall), with higher growth in the main cities, looks set to continue as the market remains one of excess demand.
- Rettie & Co is forecasting Scottish house prices to rise by a further 19% over the next 5 years.
- Demand is also spilling out into wider geographical areas around the cities. House sales in East Lothian, for example, grew by 16% over 2017, well in excess of the national growth of 4%.
- Stock levels, however, remain tight. In some core Edinburgh neighbourhoods, lev-els are down one-third in Q1 2018 against where they were in the same period in the previous year.
- These conditions are also being seen in the rental market, with rising rents again the result of excess demand conditions. In some popular Edinburgh postcodes, rents are up 7-13% in Q1 2018 compared to the previous year.
Edinburgh Market Review
- Demand for properties in desirable areas is at its highest level in a decade due to low supply.
- In 2018, stock levels in Edinburgh's most popular neighbourhoods are up to 1/3rd lower than the same time last year.
- Strong demand has seen the rise of highly ompetitive closing dates with 10+ offers above the Home Report value and sellers able to choose desirable terms.
- At the top end of the Edinburgh market, private and off-market offers are increasingly common as buyers seek to avoid competition.
- New build sales made up over 17% of the total value of property sold in Edinburgh in 2017, an increase from less than 10% 4 years ago.
Glasgow Market Review
- Prime areas of Glasgow and popular commuter suburbs are experiencing high levels of demand, leading to competitive closing dates and rising values.
- Low supply in the rental market, due to the cumulative effect of changes in the sector, is supporting rental values.
- New development, and rising demand, is seeing a shift towards the city centre as a residential destination.
- The announcement of a series of Build to Rent (BTR) schemes in Glasgow will see the tenure arrive in volume for the first time in Scotland.
- Affordable family homes in the city's suburbs have been the focus of recent new build supply, with accessibility and value being key factors.