Easier commuting set to push prices up outside cities

IMPROVED commuting and affordable house prices in areas surrounding Scotland’s major cities could push property values higher in towns such as Livingston, Motherwell and Falkirk, according to the Bank of Scotland.

A new report found that workers with jobs in city centres can save up to a third on the price of their homes if they are willing to commute.

Commuters who work in Edinburgh, but live in areas just half an hour’s travel away can save as much as 34 per cent on the cost of their homes – while those living around 30 minutes from Glasgow, in areas such as Linlithgow, Motherwell and Greenock, benefit from house prices 11 per cent lower.

Experts said the savings easily compensated for the cost of an annual rail pass, which ranges from £1,700 between Edinburgh and Livingston or Falkirk to £1,800 for Glasgow to Greenock or Motherwell routes.

“House prices just 30 minutes outside of Edinburgh are on average 34 per cent lower than in the centre of the city, more than offsetting the average £1,700 annual cost of a 60-minute commute,” the report said.

But the bank warned that squeezed household finances combined with better transport links, such as the improved Airdrie to Bathgate rail link and the Borders rail link, could spark a trend for families to move outside the cities – which could, in turn, push prices in outlying areas higher as demand rises.

In Aberdeen, this has already occurred, the bank’s research found, with commuters living approximately 15 minutes away in Stonehaven paying an average house price that is a third higher than the city centre at £229,985 – and 25 per cent more for a home in nearby Inverurie.

“I think this is a trend which will continue,” said Nitesh Patel, housing economist at Bank of Scotland. “Transport is the key. There is a lot of investment taking place in the infrastructure at the moment and if the outcome is an easier commute then quite clearly, more people will move out of the city. That, in turn, could have an upwards effect on house prices in those areas.”

But despite the average house price being still fairly low in Aberdeen, at £176,589 – and commuting costs still well over £1,000 a year – areas outside the city centre command a premium.

“In Aberdeen, people are living elsewhere and travelling in to work, which has pushed the prices higher in those areas,” added Mr Patel.

“Quality of life is also important: family circumstances, better schools, physical environment and homes that offer better value for money also come into the equation. This explains why some commuters are often prepared to pay a premium to commute when they could be better off in purely financial terms living closer to their work.”

David Marshall, business analyst at the Edinburgh Solicitor’s Property Centre, said that in the long term, areas with improved transport links would be likely to see an increase, narrowing the gap with city centres.

The Airdrie to Bathgate rail link opened a year ago, offering easier access to Edinburgh and Glasgow for commuters living in central Scotland – while the Borders rail link, which is due to open in 2014, would run between Edinburgh and Tweedbank, south of Galashiels. A new Forth road bridge, scheduled to open in 2016, would also be likely to boost the value of homes in Fife, making commuting to Scotland’s capital easier.

“I would expect, if you look at purely the financial costs of living outside a city and commuting, versus living in the city centre, you would still find that living elsewhere would be cheaper,” said Mr Marshall. “However, looking long term, I think we may see that gap narrow.

“People have previously been happy to pay a premium to live in the city centre – where they do not have to travel as far to work, they have everything on their doorstep – but people may now be less willing to do that, which is meaning prices are getting comparatively higher.”

He added that central belt commuting towns could become more popular among familes which may have members who have been forced to look further afield to find a new job in the recession.

“I think it will be the currently more affordable areas which will see the effects of this, such as Livingston and Falkirk,” he said. “Falkirk, especially, is ideally placed, especially if one member of a household works in Edinburgh and another in Glasgow.”

Neil Freshwater, of the Royal Institution of Chartered Surveyors Scotland, said that although prices may rise outside Scotland’s major cities, narrowing the gap, city centre properties were still likely to retain their value.

“Good transport links will make a commuter area more attractive to potential buyers, but the need for people to move will often be down to necessity as much as to affordability,” he said.

“This will vary from city to city depending on the supply of property types. A flat in the centre of Edinburgh might be a good first-time buy, but a young family would need to move to satellite towns to find a larger home which is proportionately priced. Whilst this could increase prices out of town, there is always likely to be a high demand for city properties.”