Edinburgh price growth at three-year high as demand for space continues

Prices in the city of Edinburgh grew at the strongest rate in three years in the second quarter, as buyers continued to look for more space post-pandemic.

With prices in the city up 2.3% in the three months to June, the annual rate of growth reached 8.8%. This was the strongest performance in two and a half years.

“Edinburgh remains a very hot market. We are seeing competitive bidding and rising prices against a backdrop of tight supply,” said Edward Douglas-Home, head of Scottish residential at Knight Frank.

With more room a key requirement for buyers, houses continued to outperform flats, with increases of 3% and 1.1% during the quarter respectively.

While all value bands experienced growth, property priced from £1.5m to £2m, typically large semi-detached family homes in the city suburbs, performed the strongest in the three months to June.

Values increased 4.1%, driven higher in many cases by competitive bidding.

Exchanges were up 13% versus the five-year average excluding 2020 during Q2. Offers accepted in Edinburgh in the same period were up 49%, and viewings by 41%.

New prospective buyers were up by 70% in Q2 versus the five-year average (excluding 2020), with the end of the Land and Buildings Transaction Tax (LBTT) holiday in March, which offered a modest £2,100 pound saving per property, having had no material impact on the prime market.

Market appraisals for sale in Edinburgh were 19% down versus the five-year average (excluding 2020) in Q2. Supply remains tight despite an increase in properties for sale during the period, with some prospective sellers hesitant about listing their properties given the lack of available purchase options.

There were 26 new prospective buyers for each new instruction in June. This is the highest level that the ratio, an indicator of demand versus supply, has been at in the 12-months since the market reopened in Scotland.

Suburban demand

The prime suburban market, predominately Victorian-era homes outside the city centre, has continued to benefit from buyers’ appetite for more space and gardens, as it did in the first quarter of 2021.

Average values in residential south Edinburgh, including the areas of Morningside and Merchiston, rose 2.6% in the three months to June, taking annual price growth to 10.9%.

West of the city centre, including the areas of Murrayfield and Barnton, also proved popular with family buyers, and average prices increased 2.7% in the three months to March and 8.5% on an annual basis.

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