We’ve been waiting with excitement (we love this stuff!) to read JLL’s annual report forecasting on the next 5 years for the Scottish residential property market and specially for Edinburgh’s property market.
JLL is an international property consultancy with a residential research team which presents annual reports on the UK residential property market. This year their forecasts are presented with a large Brexit-shaped-disclaimer; referring to the political uncertainty, potential stumbling blocks and range of possible outcomes causing an added level of difficulty predicting the UK’s economic outlook.
What’s happening in Edinburgh?
Despite this uncertainty, JLL expects Edinburgh’s property market to be in the top 5 performing residential markets in the UK over the next 5 years. With a continued shortage of new properties being built, supply to the market will continue to be well short of the required level and house prices and rental values will continue upwards.
A quarter of Edinburgh’s households now live within the Private Rented Sector compared to the UK average of only 16%. A third of Edinburgh’s population is between 15-34 (compared to only a quarter of the UK population as a whole) and average household incomes are higher than the UK Average (55% of Edinburgh’s households earn over £40,000 a year with 11% of the city’s population working in the higher earning financial and insurance sectors). Build to Rent, hailed as a part of the solution to the UK’s housing crisis, is still a long way from adding to the housing stock in Edinburgh with limited developments completed or in the pipeline.
JLL’s house price and rental value forecasts
JLL forecasts a 15.5% rental growth over the next 5 years & the same 15.5% growth for house prices. However comparing these numbers with the most recent Citylets Quarterly report, the average rent reported by Citylets for Q4 2018 was £1,095 (almost £100/month more than JLL’s figure) up 7.8% on the year before (compared to JLL’s 3.1%) so JLL’s forecasts do seem a little conservative, even with the backdrop of a post-Brexit UK.
We expect Edinburgh’s property market to remain resilient and for house prices and rents to continue to move upwards. The city’s population is expected to continue to grow strongly (on average 0.8% per year over the next 5 years) with 18,000 new residents moving to the City over that time (4.3% increase). City residents all need somewhere to live and, with an acute undersupply of properties being built, rents and values will inevitably be squeezed upwards. This all paints a very positive picture for those looking to invest in Edinburgh residential property and supports the consensus that more property is desperately needed to reach a better balance between supply and demand.