Rising demand to live in the best-educated city in the UK means it needs more houses, writes David Alexander
Recent reports on property prices have highlighted a growing price gap between Edinburgh and the rest of Scotland. One report showed that over the last year the average Scottish house price had risen 7.7 per cent higher to £184,850 compared to a 14.5 per cent rise in Edinburgh property prices to £288,039. Given that Edinburgh already has some of the most expensive property prices in Scotland, a double-digit increase in 12 months is an indication of just how buoyant the capital’s property market remains.
This will not come as a surprise to anyone involved in the Edinburgh property market. Anyone buying or selling a property will know that the city has been booming for some time and these numbers reveal just how great the demand has become.
But should we be surprised? Between 2006 and 2016, the Edinburgh population rose 12.2 per cent – against a Scottish average of 5.3 per cent – and is predicted to grow by another eight per cent in the next decade. Importantly, Edinburgh’s population growth has been driven by one of the most economically active groups in society: the highly skilled, well-educated, and well-paid.
Scotland’s capital has the best qualified population in the UK, including London, with 55.1 per cent having degrees; it has the highest annual earnings (median) per resident outside London at £29,456; and the largest proportion of high-skilled occupations (40.1 per cent) than any other city in the UK including London.
Edinburgh has always been an attractive city to live in and has drawn people from around the UK but increasingly its financial, cultural, and social life have made it a global city, attracting the young, intelligent, and affluent from around the world.
However, house price increases are due to several factors with demand on one side and supply on the other. New builds in the capital have fallen in the last decade across all sectors from the public to the private. In the 10 years to 1997, there were 21,426 new build properties in Edinburgh, but this number fell to 14,949 in the decade to 2016. This was due to a number of reasons, including the fallout from the economic collapse of 2007 and the reduced amount of social housing being built during this period but clearly this has created lower supply in the face of rising demand.
While the local and national authorities, the university, and private homebuilders have been doing their best to meet that demand, it is clear, with a population increase of 12.3 per cent in ten years and another eight per cent over the next decade, that supply has not been meeting demand. Clearly more homebuilding is required, otherwise Edinburgh’s rising property prices may begin to put people off moving here.
Scotland’s capital is a world-class city to live in with world-class property issues. That it is attracting well-qualified, well-paid individuals is to be celebrated but it must also continue to provide a home for everybody. There is an increasing need for more affordable housing across the city to ensure the growing numbers of people living here and making it their home can find somewhere suitable and appropriate to live. If that fails to happen and the affordability gap continues then Edinburgh’s stellar growth may stall in the future.
David Alexander is managing director of property management company D J Alexander