Edinburgh Property Market Update for Landlords - Autumn 2024

It’s fair to say that a lot has happened since the last update at the start of the year.

The biggest change has been in Westminster where the new Labour Government is now in power, and we await the outcome of the new Chancellor’s budget on 30th October.

Speculative suggestions as to what changes there may be in the budget are prolific, so we won’t add to them here. Instead, we’ll focus on what we do know and what is happening in the Edinburgh Private Rented sector at present.

Edinburgh Property Market 

The Edinburgh housing market in 2024 has so far experienced a period of steadying after the volatility of recent years. Following sharp post-pandemic price increases, growth has moderated, with fewer transactions but stable prices across the city. Interest rates, which rose significantly throughout 2023, have cooled buyer demand, yet prices in prime Edinburgh areas have held up well, particularly for larger homes with outdoor space.

In early 2024, prime property prices rose by 1.2% in six months, with houses performing better than flats. Houses saw a 0.9% increase in Q1 2024, while flats grew by just 0.1%. This reflects a broader trend from the pandemic, with houses in Edinburgh appreciating by 24% compared to 13% for flats since 2020.

Key areas like the West End and EH10 (Morningside) have outperformed, while others such as Stockbridge and Inverleith have seen relatively flat prices. Demand remains for high-quality, well-priced homes, especially with the ongoing appeal of Edinburgh as a city with strong amenities and international interest.

Easing interest rates and signals that they will fall further are likely to nudge average house price growth forward too.

Cash buyers, accounting for around 32% of purchases, have helped sustain activity, even as domestic buyers navigate higher borrowing costs. There’s optimism that mortgage rates will drop again later in the year and possibly in response to the October Budget’s expected pressure on the economy, potentially unlocking further market movement.

Rates are expected to gradually drift towards circa 4.0% over the next 12 months or so.

Rental Market 

The private rental sector in Edinburgh has seen some significant developments in 2024, characterised by both high demand and a shift toward market stabilisation.

Edinburgh continued to experience good rent increases, especially for properties being re-let as existing tenants vacated. New properties entering the market were able to command a higher rent at the start of the year as supply remained limited, but this has eased back slightly as more properties become available through a combination of new homes being built, affordability to buy rather than let increasing, and a number of ex-Short Term Let properties crossing the divide.

Nevertheless Q2 2024 showed that rents had risen by 6.6% on average. One-bedroom apartments saw an 8.1% increase to £1,080 per month, while larger properties like three- and four-bedroom homes had slightly lower but still substantial growth​.

The last five years seem to have been turbulent, but it is interesting to see the rental growth over these ‘Covid years’, proving how resilient the Edinburgh market is to such macro-economic shocks.

Overall, 2024 has seen an increase in availability and a slight easing of rent prices, though demand remains strong, particularly for smaller properties. Landlords have adapted well to new regulations, while tenants are benefiting from a less frenetic market than we have seen at times during the past two years. 

The market has settled since the previous rent controls ended on 31st March 2024 and the open market has self-righted without that external government influence upon it.  

The graph below shows average rents for different property sizes in Edinburgh since 2008 up to Q2 2024.

We’d previously suggested in the January 2024 update that we’d expect rents to creep forward again in 2024 to ‘more sensible levels’ and this is exactly what has happened.

Student Market

The student rental market continued to perform well this year with rents increasing again year on year.

Overall, it was the most settled year since pre-Covid and most properties followed a similar pattern whereby leavers typically exited around the 31st May, with new leases commencing circa 10 days later.

We did see a rise in the number of ‘Change of Tenant’ scenarios, where the group remains but one or two of the flatmates exit and are replaced by others.  This helps maintain full rental cashflow and we try and accommodate these requests where possible.

2024 was similar to 2023 for tenancy changes in our managed student housing stock , in that we had broadly one third fully vacating, one third fully staying on in the same group, and one third with a ‘change of tenant’.

We’d expect 2025 to be similar as the demand continues to rise, and various market commentators report that there is a growing student housing shortage across the UK.

This might be particularly exacerbated in Edinburgh given the Scottish Government’s refusal, as yet, to rule out any form of rent control measures in the future, meaning student housing investment is reluctant to step over the border when it has much more welcoming political arms further south.