Bulletproof Edinburgh is propping up house prices - David Alexander
Larger homes, usually detached, alongside newbuilds and certain geographic areas surrounding Edinburgh are proving bulletproof in terms of pricing and are helping to maintain Scotland’s average house prices when these numbers are falling in other parts of the country and across the rest of the UK.
Our analysis of the latest official figures highlights an increasing difference in the performance of different types of homes as well as geographic locations. Detached homes continue to increase in average price despite enormous gains over the last three years.
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Hide AdWhile average house prices in Scotland have fallen slightly by 1.19 per cent between July 2022 and June 2023 detached and, particularly, newbuild homes have continued to rise. The average price of detached homes between July 2022 and June 2023 rose by 0.42 per cent across Scotland with Aberdeen prices falling by 3.04 per cent while Edinburgh and Glasgow rose by 2.72 per cent and 1.33 per cent respectively.
But it is the average price increase among sales of newbuild homes which is more remarkable where they rose by 14.99 per cent in Scotland between May 2022 and April 2023 (the dates differ slightly from the wider price data as April is the latest month for which there are figures). Edinburgh had the highest price increase of 16.74 per cent; Glasgow was at 12.64 per cent; Dundee up by 9.75 per cent; and Aberdeen rose by 4.66 per cent.
There is also a growing geographic divide between Edinburgh and the surrounding areas which are all still showing average price rises at a time when much of the rest of Scotland is either stable or falling. Edinburgh is the only city in Scotland where average prices are still rising while in East Lothian prices rose by 14.7 per cent over the last year; in Fife prices were up 2.9 per cent; and in West Lothian they increased by 1.4 per cent.
Newbuilds are attracting ever higher prices at a time when the wider market is slowing or even experiencing price falls. This could be due to a number of factors but the advantage of newbuilds is that the price is fixed, and you aren’t in a bidding war for a property which can make them more attractive to buyers who know exactly how much they have to pay, and buyers don’t have to do any work on their new home.
The continued growth in Edinburgh and surrounding areas is positive but there may be a danger that one part of the country is becoming unaffordable to those outwith those areas. It is clear that Edinburgh and its near neighbours are attracting prospective buyers from across Scotland, the rest of the UK, and internationally as the capital’s reputation, it’s renowned lifestyle options for eating out, its cultural offerings, and widely accessible green spaces make for a perfect package to entice homeowners from anywhere in the world.
Whether this performance will persist must be questionable as there comes a point when people have to take a step back and consider whether they are simply paying too much for a property. That position does not yet seem to have been reached. Enthusiasm for larger properties, for homes in fashionable areas such as Stockbridge and the New Town continue unabated, and demand continues to outstrip supply.
The recent interest rate rises seem to be having little impact on buyers in the capital and it remains to seen, where the market goes in the coming months but at the moment it remains extremely vibrant and dynamic.
David Alexander is CEO of DJ Alexander Scotland Ltd