Edinburgh house price growth ‘driven by unique circumstances’

The lettings and estate agency said that over the last decade, Scotland’s capital has benefitted from double-digit population growth of well-qualified, well-paid, working-age people from around the world which has transformed its economy and its housing market.

Hosting the largest arts festival in the world has grown Edinburgh’s international status attracting people to live and work resulting in a population growth far in excess of the rest of Scotland. There is strong international interest from buyers from across the world with the New York Times running a feature this month showing what $600,000 (c. £466,000) could buy in the capital.

In the decade to 2021, Edinburgh’s population grew by 10.2% compared to a rise of 3.4% for Scotland as a whole. The capital’s working-age population grew by 8.6% during this period compared to 0% growth for the rest of Scotland.

The bulk of this population growth is in overseas migration and Edinburgh has the highest growth of any of the eight largest cities in the UK excluding London.

With 82.2% of the population economically active Edinburgh tops all UK cities including London which has 78.6% and Glasgow on 73.6%. The capital’s unemployment rate of 2.6% is the lowest in the UK and its median hourly pay of £17.70 is the highest outside London.

The news gets even better as the figures show that the capital has the largest percentage of high skill jobs in the UK with the most graduates (79.5%) of any city producing the highest GVA per capita of £48,300 of any city in the UK apart from London.

The bulk of the high GVA (£6.1 billion) comes from finance and insurance services with real estate activities the second highest producer of value at £3bn annually. Edinburgh has the highest value residential property market in Scotland with sales in the capital representing 46% of the residential market value of all Scottish cities.

David Alexander, the chief executive officer of DJ Alexander Scotland, said: “These multiple factors have produced a city that is growing rapidly and extending its growth into the surrounding areas around Edinburgh producing major housebuilding programmes resulting in prices rising steadily in East, West and Midlothian.

“The gap in house prices between Edinburgh and the rest of Scotland has grown enormously over the last decade with the average price now £327,751 in the capital compared to £191,435 across the rest of the country. That is a difference of £136,316. The difference with Glasgow is even greater rising to £151,696.”

He added: “When you examine average prices for detached homes the gap between Edinburgh and the rest of Scotland is more marked. A detached home in Edinburgh is now £715,794 on average while in the rest of Scotland is £336,060 lower at £379,734.

“There is an extraordinary difference between the capital and the rest of Scotland and there is a risk that Edinburgh becomes unaffordable for people moving into the city in the future, but appropriate action now will ensure the capital remains accessible.”