PricewaterhouseCoopers’ (PwC) latest UK Economic Outlook report, published today, also suggests Scotland is among the most affordable parts of the UK for private rental – despite the soaring levels faced by many tenants living in Edinburgh.
The rental affordability ratio calculated by the company north of the Border – the percentage of gross income spent on rent – ranges between 15 and 22 per cent for key professions including police officers, social workers and teachers.
The conventional benchmark determines that renting must cost less than 30 per cent of gross annual income for it to be considered affordable.
But those figures will be little comfort to those looking to stay in the Scottish capital, where a previous report by ECA found Edinburgh to be in the top four most expensive cities in the UK to rent in, and among the top 50 in Europe.
Homeowners, however, can look forward to their properties steadily rising in value, but only if the UK can manage to avoid a potential economic downturn caused by a no-deal Brexit.
Stewart Wilson, PwC’s head of government and public sector in Scotland, said: “House price growth in Scotland looks set to remain steady over the next four years, though this is influenced in real-terms by inflation and wage growth levels.
“For home owners looking to move, achieving a higher selling price can help with mortgage terms. However, faster growth presents a challenge to first-time buyers looking to make that important first step on to the property ladder.” PwC predicts economic growth in Scotland of 1.6 per cent this year, making it the second fastest-growing of the nations and regions of the UK.
Assuming the UK avoids a disruptive no deal Brexit, the average value of a house in Scotland is expected to rise 1.7 per cent in 2019, increasing to 2.4 per cent in 2020 and a further 4.7 per cent through 2021 and 2022. This means the average house price in Scotland will increase from £149,000 today to £170,000 by 2022. The current growth rate is moderate in relative terms, with the average house in the UK increasing in value by 1.4 per cent in the 12 months to April this year, led by a 6.7 per cent increase in Wales.
Economic growth has slowed since early last year due primarily to the dampening of business investment as a result of Brexit-related uncertainty and heightened global trade tensions. PwC’s report also projects that UK growth will be more balanced across the nations and regions in 2019-20, with London no longer growing significantly faster than the UK average as has been the norm in recent decades. Mr Wilson added: “Consumer spending – supported by recent rises in real incomes – has continued to drive the Scottish economy, but we may be in for something of a bumpy ride this year given we are still unclear on when Brexit will happen and under what terms.”