House prices set to grow by 10% in Scotland in next five years
House prices in Scotland are set to increase by around 10% over the next five years with Edinburgh seeing growth of 22% and Glasgow 17%, according to a new analysis.
It means that Edinburgh is forecast to see one of the highest price growth in the UK with an average of 4.1% per annum, says the residential report from property consultancy JLL.
It also forecasts that rents in Edinburgh will increase by an average of 3.3% per year while those in the centre of Glasgow will rise by 3.2%.
The report shows that over the last five years price growth in Scotland has averaged 2.9%, aggregating to a 15% recovery. This price growth has come at a time when Scotland, like the rest of the UK, has continued to under deliver the number of homes needed to meet demand or to achieve the required targets.
For Edinburgh, the story of the next five years is one of unabated growth. Strong demand from buy to let investors, first time buyers and the wider market is leading to multiple bids at closing dates for individual properties, the report points out, adding that a lack of new build stock coming onto the market will only fuel further increases.
The five year forecast of 4.1% per annum for Edinburgh is one of the highest city growth forecasts in the UK, and the rental forecast of 3.3% increase per year, is significantly higher than the UK wide forecast.
For Glasgow, the housing market has been characterized by a shift in interest during 2017 from an almost entirely build for sale bias towards an emphasis on Build to Rent. This shift is evident in Glasgow’s planning pipeline where there are currently around 2,500 units, the report explains.
Over the next five years, Glasgow city centre sales are expected to rise by an average 3.2% per annum, below that of many UK city centres but higher than the UK forecast. Rents in Glasgow are also set to grow at 3.2% pa over the same period.
‘A range of factors are colluding to deliver more moderate house price growth across the UK, including Scotland, over the next five to 10 years. However, and despite the intrusion of Brexit, we believe this transition will provide a more stable and healthy housing market. This new housing paradigm should be embraced and welcomed,’ said Neil Chegwidden of JLL residential research.
‘It is good for Government, the economy, buyers, sellers and industry participants. But it will also take some getting used to. House price growth averaging 2.5% per annum in the UK for the next five years will not excite investors or home owners, but will lay the foundations for a less volatile housing market in the medium term,’ he added.
According to Jason Hogg, director of JLL’s residential team in Scotland, the forecast for the whole of Scotland is somewhat skewed by the continued outperformance of both Edinburgh and Glasgow.
‘Edinburgh in particular is forecast to see strong price growth as limited development activity creates further discord between demand and supply. There have been a few core city centre schemes in recent years but the high price points of these have not alleviated the undersupply of more ‘affordable’ private housing in Edinburgh’s city centre,’ he said.
‘But Glasgow too is set for an exciting few years and something of a revolution in housing terms. The Build to Rent sector seems to have dialled in to Glasgow over the past year and is lining up to dominate residential development activity over the next few years. Not only are there thousands of units in the planning pipeline, but with UK wide Build to Rent operators behind this drive, the Build to Rent transformation has greater weight, credence and certainty,’ he concluded.