Harry Crombie
We now enter a new year and one which will bring lots of challenges and excitement, not least as Edinburgh continues to thrive.
In the Rental Market, we have seen steady, continued growth over the last 9 years, of around 4 – 5% per year. 2018 saw an increase of nearly 6% in rents in Edinburgh, whilst there has been a 35% increase in rents over the last 5 years*. This is all been a result of increased population of professionals in the city, fewer people able to get on to the property ladder as lending rules are far stricter, Edinburgh’s improved global network, tourism and the city generally being considered as one of the top places to live in Europe.
Whilst this is all very positive, and we expect things to continue on an upward trend in 2019, there will be some changes to the market and the political landscape. Therefore, we see a cautious yet optimistic approach to the year ahead. Rents across the city have out-performed our expectations over the years, and we have always pushed to get the highest possible rents. We were 9.4% higher than the city average for rent levels in 2018°.
There is increased building and development going on, providing more affordable homes. There are changes in legislation to short let and holiday accommodations, which will push more property stock back to the long term market. We are still seeing more investors coming to the market providing more quality properties for rent. There is Build To Rent properties coming on as well. Finally, there is the ongoing saga and uncertainty with Brexit.
These are all reasons as to why we expect the supply of property to increase, therefore, stabilising rent levels a little. However, with Edinburgh’s population due to grow by another 3,000 people per year over the next 5 years, world class developments at St James Centre, St Andrew Square and Haymarket being built, improved transport, world class Universities and a city that is a hub for Finance and Technology, we expect that the rental market will remain healthy.
We want to see rent levels that are fair and strong, reflective of a property. We will continue with a responsible attitude to manage expectations, ensuring properties are well maintained and let out swiftly to the right people then naturally, there will be ongoing growth in the market.
Our view on the sales market follows a similar trend to the lettings market. There will be continued growth in the city, however, we need to be cautious that not every property will achieve inflated prices that perhaps were seen in the first half of 2018. Scotland, and in particular, Edinburgh, has tended to fare much better than the UK on average and we would expect to see growth in the region of 2 – 3%, which is lower than the 6 – 8% growth we saw in 2018^ in most parts of Edinburgh, though with fewer sales.
With Brexit and the ongoing saga it brings, there is uncertainty and lack of confidence in the market. Until there is absolution and a definitive answer to what is happening, the uncertainty will spread through various sectors, not just housing, as markets have seen a slowdown this last 4 or 5 months. The 29th March is looming and whatever the outcome, we will be READY. Aberdeen has seen some growth this last year and we look forward to keeping a close eye on how this develops and that house prices get close to their pre-2015 peak in the years ahead. In Edinburgh, we are fortunate that the city is going from strength to strength and we can take a responsible attitude, ensure our clients properties are maximising their potential.
We look forward to the year ahead and challenges it brings, though we expect to be reporting positive figures in 12 months time.
*Source: Citylets.co.uk
° Source: Lettingweb.com
^ Source: Registers of Scotland
