House prices in Edinburgh and Glasgow are set to grow by 22 per cent and 17 per cent respectively over the next five years to 2022, according to new research from a leading property consultancy.
Forecasts for the next five years across Scotland suggest more moderate growth of around 10 per cent, marginally underperforming the UK five year forecast of 12 per cent.
Investment management firm JLL’s residential forecast for Scotland shows that house price growth has averaged 2.9 per cent per annum over the past five years, aggregating to a 15 per cent 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. A lack of new build stock coming on to the market will only fuel further increases. The five-year forecast of 4.1 per cent per annum is one of the highest city growth forecasts in the UK, and the rental forecast of 3.3 per cent increase per year, is significantly higher than the UK-wide forecast. For Glasgow, the housing market has been characterised by a shift in interest during 2017 from an almost entirely build for sale bias towards an emphasis on build to rent. This is evident in Glasgow’s planning pipeline where there are currently around 2,500 units. Over the next five years, Glasgow city centre sales are expected to rise by an average 3.2 per cent per annum, below many UK city centres but higher than the UK forecast. Rents in Glasgow are also set to grow at 3.2 per cent a year over the period.
Neil Chegwidden, of JLL residential research, said: “A range of factors are colluding to deliver more moderate house price growth across the UK, including Scotland, over the next five to ten years.
“However, despite the intrusion of Brexit, we believe this transition will provide a more stable housing market. This new housing paradigm should be embraced and welcomed.
“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 cent per annum in the UK for the next five years will not excite investors or homeowners, but will lay the foundations for a less volatile housing market.”
Jason Hogg, director of JLL’s residential team said: “Although we’re looking at five years of moderate growth across Scotland, the forecasts are somewhat skewed by the continued outperformance of both Edinburgh and Glasgow.”