By David Alexander, Managing Director
The inner-city district of Dalry has not been regarded as one of Edinburgh’s property hotspots up to now, but even here a one-bedroom Edwardian-built tenement flat attracted 17 formal offers from a variety of keen buyers shortly after the property was placed on the market recently.
Yep, Edinburgh is once again undergoing one of its periodic booms specific to the capital, which frequently differs from the rest of Scotland. The big difference with this latest splurge of high demand and, with it, rising prices is that activity is being drive by its first-and-second time buyers rather than – traditionally – buyers with large wallets. Not only has the earlier flood of wealthy bankers being transferred to the city become a trickle but the draconian rates at the higher end of Land and Buildings Transaction Tax has meant a significant reduction in locals trading up from middle- to upper-market properties.
However, for vendors marketing their homes at up to around £400,000, times are good, though the downside is that the situation is leaving many potential buyers frustrated and even the successful ones having to “bid to win” to achieve their goal.
One reason behind the current phenomenon is that although mortgage deposits are still proving a tough challenge for many, there are good deals around for those who do manage to raise the appropriate cash and who pass the lenders’ increasingly strict applicant criteria.
I suspect also that many see higher interest rates on the horizon and that first-time buyers, especially, are determined to make a huge effort to move from rental accommodation to owner-occupation and secure a fixed-rate deal before the cost of mortgages begins to rise appreciably higher. A somewhat lesser factor could be that those more-established EU immigrants who are known for having a savings habit are now qualifying for mortgages and thus increasing the pressure on the availability of homes. But why is this particularly affecting Edinburgh? Well, we are basically back to the old draw of our capital city that, frankly, other parts of urban Scotland simply do not have, or at least not to the same extent.
Consequently there exists a large number of outsiders competing with local singles, couples and families. As a born and bred West Coaster, I consider Glasgow to be a great city. However, while many outsiders move to Glasgow they basically do so because of the offer of a job, rather than the attractions of the city – and there are many – per se. In contrast, large numbers moving to Edinburgh do so as a lifestyle choice: it is the idea of living in this unique city that draws them, rather than a job. Some adopt this attitude having visited as a tourist while a few never even been to Edinburgh but made a decision based on what they’ve seen of it.
Of course they do need a job – and a fairly well-paid one at that – to survive and prosper in Edinburgh and, despite various economic storm clouds on the horizon, there is still a good supply available in various professions and trades.
Demand is particularly acute within a three-mile radius of the city centre because that is where newcomers, especially, want to be; unfortunately, little or no land is available for new residential development within this area. So can anything be done to stimulate development and by so doing to take some pressure of hard-pressed house-hunters? Within the central area several large redundant or underperforming commercial and public buildings have, in recent years, been redeveloped as hotels. Perhaps apartment blocks should be the next big thing in this respect.
Also helpful would be a crackdown on the number of flats regularly let out to tourists, particularly “stag and hen” revellers. This would increase the stock of bona fide housing at a stroke – and bring some deserved relief to neighbouring residents for whom Edinburgh is a place to call home.
This article originally appeared in The Scotsman on 23 November 2017 titled ‘Lower-priced property drives Edinburgh market’.