‘Very hot indeed’: Edinburgh property has the edge

Ellie and her husband Neil put their four-bedroom house in the genteel Edinburgh suburb of Morningside on the market in September for offers in excess of £1.35m. Within 10 days, they had 16 viewings, received multiple offers and sold it to a local family for £45,000 over the asking figure.

“It was a big house in a sought-after area, but we were surprised it went so quickly,” says Ellie, a retired nurse who did not want to give her last name. “We had been worried about the impact of Covid, although I suspect people wanted to move before another lockdown.”

There’s a similar story in other parts of Edinburgh, even amid pandemic restrictions. In mid-January, after two weeks, 46 viewings and 13 offers, Strutt & Parker sold a five-bedroom terraced villa in Newington for £950,000, £200,000 above the asking price. The estate agency has also just agreed the sale of one of the most expensive properties on the market: a Georgian town house in the West End, listed at £2.45m. 

The pandemic has caused a run on family homes in sought-after areas, says Natalie Simpson, head of Strutt & Parker’s Edinburgh office. “People are looking for more space, room for a home office and, crucially, a garden,” she says.

Property prices in the city rose 3.3 per cent in the year to January to an average of £240,400, according to Zoopla, and are 34 per cent higher than a decade ago. Between November and January, Edinburgh properties sold for an average of 3.5 per cent over their home report valuation (an independent value carried out by a surveyor), according to portal ESPC, though agents say larger houses can sell for higher premiums.

Analysis of TwentyCi data by Savills shows 11 £1m-plus deals were agreed in January, compared with four in the same month in 2020 and four in January 2019.

The analyst PropCast says 57 per cent of homes for sale are under offer. “Anywhere with 35 per cent or more homes under offer is a seller’s market, so this suggests Edinburgh is very hot indeed,” says Gavin Brazg, PropCast’s founder. 

The city’s high prices — Edinburgh is the least affordable place to live in Scotland, with property values about eight times average annual earnings, according to the Bank of Scotland — have been underpinned by a chronic lack of houses for sale, especially since the latest lockdown began on January 5. 

Knight Frank says the number of new sales instructions it received in January was 16.7 per cent lower than in the same month last year, while market appraisals were down 85.4 per cent. “Lockdown and home schooling have made hosting viewings difficult so many sellers are holding off until spring,” says Chris Druce, its senior research analyst. 

While the median time to sell a semi-detached house in Edinburgh has fallen by 20 per cent compared with a year ago to 20 days, a flat now takes
a median 80 days to sell, double the time taken in March 2020, according to home.co.uk. Nevertheless, Dr John Boyle, director of research at Rettie, says flats are still often trading around home report values.

First-time buyers will often look east to the regenerated port district of Leith, where flats in converted warehouses are listed from £150,000. Top family areas include Stockbridge, Inverleith and Trinity to the north; here, Georgian and Victorian semis cost from £800,000.

To the south are the Victorian terraces of Southside and Newington and the grand villas of Morningside — the latter cost from £1m. The most expensive properties are in the centre: the West End, the Old Town and the grand Georgian crescents of the New Town, where town houses can sell for £2.5m. 

While house sales are strong, Edinburgh’s once red-hot rental market has faltered since the pandemic. Advertised rents, which had risen by more than 40 per cent in a decade, fell by an average of 4.1 per cent last year, according to letting portal Citylets. This marks the first decline in advertised rents since 2009, providing some relief to tenants, who typically spend 34.2 per cent of their salaries on rent, Zoopla says.

Tourism has a huge impact on the city, and investors snapped up flats to rent on short-term rental sites such as Airbnb, leading to fears of a housing crisis for locals. However, when travel came to a halt, landlords of short-term lets switched them to long-term leases, flooding the market. In July, the supply of rental stock rocketed by 127 per cent compared with the three-year average, Zoopla says, and in the past three months is still up 31.4 per cent.

Some landlords are making the switch to long lets permanent, including David Arbuthnott, who owns 10 rental flats in the city. He is bullish on the capital’s long-term prospects. “Edinburgh has beautiful buildings, high levels of infrastructure investment, lots of greenery and you can be in the Pentland Hills or on the beach within an hour,” he says.

Buying guide

• There are three prices in the Scottish market: the home report valuation, which is carried out by a chartered surveyor; the offers over price, which is typically 5 per cent below the valuation; and the price the buyer is willing to pay. Mortgage providers will only lend up to the valuation amount, leaving buyers to foot the difference.

• There are 4,676 homes in Edinburgh worth £1m or more and these account for 62 per cent of all £1m-plus homes in Scotland, Savills says.

What you can buy for . . . 

• £425,000 A one-bedroom ground-floor flat in The Playfair at the converted Donaldson’s College, set in 18 acres, through Savills.

• £995,000 (offers over) A Georgian terraced town house in Stockbridge with four bedrooms, a garden and two sun terraces, through Rettie.

• £2.75m (offers over) A luxurious seven-bedroom house with a south-facing garden in a prime crescent in the West End. Available through Knight Frank.

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