Recently voted 'the most attractive city to live and work in the UK', Edinburgh is a city with improving connectivity to the world. Scotland’s capital is home to more FTSE 100 companies than any other UK city outside London and has increasing recognition as a global technology hub, in no small part down to Edinburgh University, which has one of the highest graduate retention rates in the UK. 

Equally, Edinburgh property saw the highest value growth of any local authority area in the UK during 2017 and continues to have the fastest growing property market in the UK. But why is this, when sentiment in some other parts of the UK have suffered from Brexit angst? 

Simply put, it's economics: demand here is greater than supply. The number of new buyer enquiries to Savills Edinburgh office has risen by 28 per cent in three years. However, the level of available property is not keeping up with this rising demand, with only a 10 per cent increase in supply over the same period. 

I find it fascinating that so many of our buyers are coming from outside Edinburgh: a total of 42 per cent this year, demonstrating the city's national and international appeal. Quality of life, education, tourism and increasing employment opportunities are all helping to drive this demand. Ultimately, however, the Scottish capital – despite recent price growth – represents good value for money when compared with other UK cities.

Indeed there is a huge disparity in how university city markets have performed over the last 10 years. Average values in Cambridge currently sit at 45 per cent above 2008, the peak of the UK market. Values in Oxford are 20 per cent above peak, Bath 17 per cent, York 16 per cent and yet Edinburgh is just 1.6 per cent above the peak values of 10 years ago.  

This disparity shows opportunity for further value growth within Edinburgh, even with Brexit uncertainty. Let’s not forget that the Scottish market has been dealing with uncertainty since the financial crash by virtue of general elections, referenda (Scottish Independence and EU) and the introduction of Land and Buildings Transaction Tax. Uncertainty is built into our market and our resilience is perhaps another reason why we are now outperforming the rest of the UK.

A note of caution though. While positive, Edinburgh's residential property market is also a very price sensitive. We will not be immune from any Brexit fallout and it will become increasingly important to set the asking price at competitive levels below valuation to achieve maximum  interest. History relates that in the face of uncertainty, fewer people sell and so I predict that supply will fall in the lead up to Brexit and no doubt immediately after. 

For all the reasons mentioned, demand is likely to continue at higher rates and Savills research team is predicting a steady 2 per cent growth next year. Our five-year forecasts are for higher price rises in Scotland than in London and the South East, making now a good time to buy property in Scotland’s capital. And while there is high demand and less supply there should be good opportunities to sell over the next year.

Further information

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