Residential rents in cities in Scotland recorded a record high of £789 per month in the second quarter of 2017 as demand from tenants continued to exceed supply, the latest index data shows.
During the three months to the end of June rents increased by 1.5% year on year led by growth in Edinburgh and Glasgow with rises of 5.2% and 5% respectively, according to the figures from Citylets.
Even in Aberdeen, where the property market has been hit by falling oil prices, rents continued to level off and are now down just 5.2% year on year, and a far cry from the minus 20% recorded a year ago.
Property to rent in Aberdeen typically now stands at £788 per month, just £1 below the national average and a breakdown of the figures shows that four bed properties recorded a 4.5% gain year on year, the first for any property type in Aberdeen for nine quarters.
Rents in Edinburgh increased 5.2% year on year to an average of £1,037 per month, well above any other location in Scotland. All major markets in the city recorded strong gains with two beds performing best, up 6% at £950 per month. The report says that it is hard to foresee the market declining any time soon nor falling below the £1,000 mark even during the quieter end of year period.
Meanwhile on the other side of the central belt, the Glasgow market continued its rise recording 5% annual growth to take rents to £755 on average. Whilst the city average is predominantly driven by growth in the one and two bed markets, four bed properties recorded a significant 10.1% growth on last year.
Markets in other major locations around Scotland recorded steady figures with rents rising around 1% in Dundee, West Lothian, South Lanarkshire and Renfrewshire.
The report says that the outlook for Scotland’s private rented sector seems to be one of continued growth in major conurbations, underpinned by the central belt and, should Aberdeen’s market fully level off or indeed rebound, nationally rents could see 3% to 4% rises in the near future.
‘Our latest report underlines the metronomic strong growth in Scotland’s largest cities. Edinburgh has recorded positive annual growth every quarter for a full eight years and averages 6% over the last five years. Glasgow is up 5% on average over the same period,’ said Citylets managing director Thomas Ashdown.
The Scottish rental market is being supported in part by the rapidly growing build to rent sector, according to Stuart Montgomery, director of lettings at Rettie & Co.
‘Build to Rent is now emerging in Scotland as a key new residential use class, with over 2,500 units now in the pipeline in Edinburgh and Glasgow. This is driven by a rising rental market and socio-economic changes, in the overall context of weak housing supply, creating opportunities for developers and investors,’ he explained.
‘Scottish cities compare favourably to other parts of the UK in terms of yields, entry prices and potential for growth. At nearly 7%, average gross rental yields in Glasgow are as high as they are anywhere else in the UK. Affordable Buy to Rent schemes are now well established in Scotland, with high levels of demand,’ he added.
