Edinburgh Market Review
Research scotland Market Review

How has the Edinburgh property market coped with the economic and political challenges of the last 12 months?

Q1 2024

With a rise in interest rates, the introduction of new legislative measures and a changing geo-political landscape, our Residential Market Review reflects on the influences on the property market over the past year, and discusses what's in store for 2024.

Edwina de Klee

Edwina de Klee

Senior Associate Director

+44 7384829952

The litany of legislative and financial stress factors that have arisen since the Covid pandemic has understandably impacted the residential property market in Edinburgh and its hinterland. Interest rate increases have caused concern, as have the introduction of further legislation governing the short-term rental market together with rising inflation and other uncertainties. Further afield, the political and physical conflicts endured by other parts of the world have also impacted the UK.

The good news is that, despite these political and economic challenges, the evidence of market activity in and around Edinburgh is that the marketplace has remained remarkably robust with the city demonstrating its ability to adapt to adversity. Market demand for property in Edinburgh remains firm, and we believe this is testament to the outstanding quality of life on offer here. With exceptional schooling options in both the private and state sectors, beautiful architecture, stunning landscapes, and ambitious civic and private investment plans, including the St James’ Centre, the extension of the existing tram network and the pedestrianisation of George Street, the city is abundant with opportunity.

For the last two years, Edinburgh city has held the mantle for the highest average residential property sale price across all urban areas of Scotland, with 60% of properties on the market above £1,000,000 during 2023 being located in the city. Likewise in terms of sales volume, Edinburgh outperforms all other areas in Scotland for properties over £1,000,000 ahead of Aberdeen, Glasgow City, Fife and East Lothian in that order. The city also currently holds top position for the quickest geographic location in Scotland to secure a buyer, taking 32 days on average from the point of launching the sale.

According to the Registers of Scotland, the average house price in Scotland increased by 2.5% during 2023 (compared to an overall decrease of 0.1% across the UK). This demonstrates that, despite economic and other external pressures, the Edinburgh residential market has been more robust than forecasts had anticipated at the tail end of 2022.

More generally, the volume of residential sales across all Scottish cities during 2023 decreased by 8.5% following an exceptional period of activity the previous year due to the pent-up demand created by the Covid pandemic. During this period, interest rate increases from 3.5% to 5.25% have impacted demand, and what we can now see is a flattening of the market, with fewer buyers per property, but overall, a more normalised seller to buyer ratio. This should be encouraging for vendors and buyers alike on the basis that for sellers, there may be fewer buyers per property than previously, but prices remain firm whilst for buyers, there may be a greater choice or range of property available to buy at a given budget.

More specifically – how has the market changed on a neighbourhood-to-neighbourhood basis within Edinburgh?

For those currently living in Edinburgh or perhaps looking to sell or buy in the city, we look more closely at how broader market changes have had an impact on a micro scale in the city:

- In the New Town, home to some of Edinburgh’s most exclusive and high value Georgian homes, the average property price as at the end of 2023 is £448,934 with little change in property values during the course of 2023, compared with the previous year.

- In Stockbridge, home to many characterful properties and on the doorstep of Inverleith Park, we have seen an 8% decline in prices during 2023 compared with the previous year, whilst Inverleith and Trinity have both seen a 4% decrease in house prices during the same period.

- In Murrayfield, which hosts some of the city’s most prestigious private schools, prices also remained consistent with 2022 during 2023 but it is worth highlighting that the area has seen a 15% house price increase since the end of the Covid pandemic in 2020.

- EH10 which covers Morningside and further South saw sold prices 5% up on the previous year. This was the same in EH9 which covers The Grange.

- Barnton and EH4 overall saw sold prices over the last year 3% down on the previous year but still 6% up on the 2020 peak.

Mortgages

On average, 65% of residential property buyers across Scotland require a mortgage, so it is little wonder that the rise in interest rates we have witnessed has had a significant impact. Mortgage securities recorded with the Registers of Scotland were 6.7% down in the last year compared with the previous one but we feel that hope may already be on the horizon for those with borrowing requirements, with many more brokers over the past few months securing opportunities for their clients to secure finance at less than the Bank of England base rate.

The Edinburgh market at a glance

Supply
- 60% of properties sold in Scotland above £1millon in 2023 were located in Edinburgh.
- A high volume of transactions in Edinburgh are still being sold ‘off market’ relative to elsewhere in Scotland.

Demand
- Demand has remained for high quality, sensibly priced residential property. On average, it’s taking one month to secure a purchaser from when the property is launched for sale.
- 35% of transactions across Scotland were cash purchases – a 20 year record.
- Houses are still in higher demand than flats, with outside space commanding a premium since the pandemic.

Pricing
- Edinburgh had the highest average residential property price across all Scottish cities in 2023.
- Buyers are becoming more price sensitive as the market adjusts to external pressures.

Coming to the market in 2024

We are extremely excited to have some exceptional instructions to launch to the market in Edinburgh and elsewhere throughout Scotland in 2024. These vary from a pristine family townhouse in Edinburgh to an outstanding castle in Angus. We also have several off-market opportunities which we can share discreetly with keen prospective purchasers.

Outlook

After a readjustment to market conditions during 2023 following an extraordinarily buoyant market in the immediate aftermath of the Covid pandemic, we look forward to a period of relative equilibrium between supply and demand in Edinburgh this year. Key factors at play will be the timing of the General Election, potential changes in interest rates (albeit a movement south isn’t predicted until the end of 2024 earliest) and the outcome of the Spring Statement to Parliament. Whilst Edinburgh remains a strong magnet for both local and international interest, we look forward to another year of continued activity. If you are considering the purchase or sale of a residential property in Edinburgh or the surrounding areas, please do get in touch, we would be delighted to help.