City Markets

Stock levels, particularly for one and two bedroom properties in Edinburgh remain high and this continues to suppress values, with the average asking price per calendar month falling by 7% in the 12 months to the end of March this year, according to Citylets. 

In contrast, the rental markets in Glasgow and Dundee remain surprisingly robust, with the monthly average rising annually by 6% and 2% respectively. In Glasgow, the figures were higher for three and four bedroom properties as tenants seek more space.

However, values for one and two bedroom properties in both cities have remained steady so far this year. Meanwhile, rents in Aberdeen have remained stable for over two years, with values rising for four bedroom properties.

Surrounding locations

Much as it has done in the sales market, the desire for more space both inside and outside the home has driven a significant increase in the rental demand for houses.

As a consequence, monthly rents in suburban, commuter and regional locations have risen. Demand in these areas continues to come from a variety of sources. Long-term renters are competing with those looking to rent while they search for a suitable property to buy and others looking for a weekend property to enjoy as social distancing measures are gradually eased.

Such demand has depleted levels of available stock, coming at a time when the strength of the sales market has allowed many accidental landlords to sell. With a fall in the amount of stock available to rent, properties are now remaining empty for fewer days compared to last year.

Outlook

While significant progress has been made in the nation’s vaccination programme and there is a roadmap for the gradual relaxation of social distancing measures, we expect the circumstances created by the pandemic to shape the rental market over the next six to nine months. As a result, we expect the market to remain stronger for properties in the commuter belt and family homes. 

Over the longer term, we expect demand for smaller properties and those in Edinburgh to gradually normalise. The pace at which this occurs will depend on several factors. Firstly, with the resumption of international travel. Secondly, a progressive improvement in corporate demand as the economic recovery gathers momentum. And thirdly, the return of young professionals and sharers looking for accommodation in proximity to their main place of work.