Market Overview for Scotland: April 2023
The outlook for the Scottish rental market remains resoundingly optimistic. Demand is at an all-time high and rents for new tenants are rising at a faster rate than anywhere else in Britain. DJ Alexander completed over 700 new tenancy agreements in the latest quarter.
The latest figures show that average rents rose by 5.1% in the 12 months to March 2023 which is the highest-ever figure for Scotland since the data started being collected in 2012 by the Office for National Statistics.
Within these average figures, there are pockets of even stronger growth with gross yields for flats between 5.1% in Edinburgh and 7.4% in Aberdeen. Edinburgh, in particular, remains a very strong market with average monthly rents now £1,014, Glasgow averages £780 per month, St Andrews rents are £1,620, while Aberdeen is £706 at our sister brand, Stonehouse.
Edinburgh, Glasgow, St Andrews, and Aberdeen all benefit from an enormous student population (an increase in numbers of 25% in the last five years compared to 20% for the rest of the UK). Coupled with additional strong demand from visitors to the major university cities for work, this has resulted in a good long-term market with no sign of any slowing in demand in the future.
For landlords who have an existing tenant and have had rents frozen or, more recently, capped at 3% they can take comfort from the capital growth which has occurred in the last three years. The average property price in Scotland remains 22.8% higher than in March 2020 when values rose at the start of the pandemic and are still only 3.9% down on last August’s peak. After a few months of faltering increases, they have started to rise once again so landlords will have experienced a quite substantial increase in their capital.
This additional capital growth could be used to borrow more to fund additional acquisitions where higher rents can be charged. We have many landlords and property investors who see the current market as an opportunity for further investment and are using their accumulated capital growth to fund further purchases.
In the medium to long term, there is little doubt that Scotland, and its major cities, remain an excellent place to invest in the property market both for good rental returns and substantial capital growth.
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