As a bustling capital city with lots to offer its residents, it’s no surprise that Edinburgh is a very desirable place to live.
But with properties in high demand, prices are continuing to rise at an extraordinary rate. Recent figures from Hometrack show that house prices have risen by 6.7 per cent in the past year in Edinburgh, compared to just 2.3 per cent in London. Some areas of London have even seen a fall in house prices recently, with an average drop of £18,000 across the city between August and September 2017.
In Edinburgh, however, prices are rising in some areas (such as Corstorphine, Clermiston, South Gyle and East Craigs) by as much as £5,500 per month
Lack of available properties
According to research from ESPC, the average price for a home in the Scottish capital is £253,182.
On average, it takes just 16 days for a property in Edinburgh to sell, and 77.8 per cent of properties exceed their home report valuation.
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Cameron Stephen, owner of Edinburgh-based estate agents, Cameron Stephen & Co, suggests that the high prices and quick selling times are due to a shortage of suitable properties.
“The shortage of properties coming to the market means that there are multiple buyers looking to buy the same sort of property, and it is not unusual for there to be 10 or more buyers wanting to offer at closing dates,” explains Stephen. “That forces buyers to offer more, and it is now common for such properties to sell for 10 per cent (or even as much as 20 per cent) over their home report values.”
Maria Botha-Lopez, ESPC’s business analyst, agrees that the lack of available properties is putting huge pressure on the market, and causing an increase in average selling prices.
“The number of new homes brought to market between the months of July and September decreased by 0.5 per cent, and it is this lack of availability of properties to buy that is putting demand on the market.”
Difficulties for first time buyers
With the market currently favouring sellers, it can be difficult for buyers – especially first timers – to snap up a property.
Although the same results can be seen higher up the ladder, it is new buyers who feel the effects first. “It starts at the lower end of the market, which attracts first time buyers and investors,” says Stephen.
“In Scotland, lenders only lend as a percentage of the home report value, so that means first time buyers need to have a substantial deposit to cover the gap.”
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Stephen’s colleague, Amy Lorimer, suggests that first time buyers should carefully consider their budget, have an understanding of home reports, view properties quickly, and even consider new builds in order to successfully purchase a property in the current market.
“While first time buyers may be disheartened by the quick selling times and increase in average selling prices in some of Edinburgh’s most popular places, the most affordable types of properties are two bedroom flats in Craigentinny and one bedroom flats in Gorgie,” adds Botha-Lopez.
Although purchasing a property in Edinburgh is not impossible for first time buyers, it remains difficult, and it looks unlikely that the market will dip in the foreseeable future. The desirability of regional cities.
But why is Edinburgh, in particular, seeing higher price growth than elsewhere in the UK? Lorimer suggests that it is partially due to Edinburgh’s unique character, with a bustling city centre, great business links, fascinating history, peaceful countryside and seaside views all in one place.
“There’s nowhere else in the world that has so much on offer in a relatively small city. Who wouldn’t want to be part of that?” Lorimer remarks.
And it isn’t just Edinburgh which is being affected by these price rises.
Other cities, such as Manchester and Birmingham, have seen similar growth, with an increase of 6.5 per cent and 5.9 per cent respectively.
Although prices are rising in these cities, they are starting from a lower base compared to London. As London’s property bubble bursts, many people are looking towards regional cities where properties are comparatively affordable.
The shortage of properties, however, continues to cause problems for local first time buyers.