Edinburgh’s house price growth is inevitable due to its unique circumstances, according to Scotland’s largest lettings and estate agency DJ Alexander.
The circumstances are the influx of well qualified, well paid, working age people from around the world, as the city’s population has risen by 10.2% in the decade to 2021, compared to an increase of 3.4% for Scotland as a whole.
The Edinburgh Fringe festival has given the city a strong international status, as the New York Times ran a feature this month showing what $600,000 could buy in the capital.
David Alexander, the chief executive officer of DJ Alexander Scotland, said: “These multiple factors have produced a city that is growing rapidly and extending its growth into the surrounding areas around Edinburgh producing major housebuilding programmes resulting in prices rising steadily in East, West and Midlothian.
“The gap in house prices between Edinburgh and the rest of Scotland has grown enormously over the last decade with the average price now £327,751 in the capital compared to £191,435 across the rest of the country. That is a difference of £136,316. The difference with Glasgow is even greater rising to £151,696.”
Alexander added: “When you examine average prices for detached homes the gap between Edinburgh and the rest of Scotland is more marked. A detached home in Edinburgh is now £715,794 on average while in the rest of Scotland is £336,060 lower at £379,734.
“There is an extraordinary difference between the capital and the rest of Scotland and there is a risk that Edinburgh becomes unaffordable for people moving into the city in the future, but appropriate action now will ensure the capital remains accessible.”
The capital has the largest percentage of high skill jobs in the UK with the most graduates (79.5%) of any city producing the highest GVA per capita of £48,300 of any city in the UK, apart from London.
The bulk of the high GVA (£6.1bn) comes from finance and insurance services with real estate activities the second highest producer of value at £3.0bn annually.
Edinburgh has the highest value residential property market in Scotland with sales in the capital representing 46% of the residential market value of all Scottish cities.
Alexander added: “Encouraging greater investment by property investors and support for landlords would produce a steady flow of suitable homes for the well-educated, well paid, working age people flooding into the city keen to live and work in a dynamic and lively location.
“To mitigate wider demand there needs to be more housebuilding generally and a substantial increase in the volume of social housing is essential.
“Amazingly Edinburgh has a further advantage over the other major cities in the UK in that it is the least densely populated allowing for further building in the future. A growing Edinburgh is a positive sign of a growing Scotland and should be welcomed.”
