Rents in Scotland have hit a record high as demand from renters continues to exceed supply, fresh figures show.
The latest quarterly report for Q2 2017 reveals that rents increased by 1.5% year-on-year to reach an all-time high of £789 per calendar month, led by growth in Edinburgh and Glasgow.
Growth was underpinned by continued strong uplift in the key conurbations of Edinburgh and Glasgow, where rents rose by 5.2% and 5%.
“Our latest report underlines the metronomic strong growth in Scotland’s largest cities,” said Citylets MD Thomas Ashdown. “Edinburgh has recorded positive annual growth every quarter for a full eight years and averages 6% over the last five years. Glasgow is up 5% on average over the same period.”
The Scottish rental market is being supported in part by the rapidly growing build to rent sector.
“Build to Rent is now emerging in Scotland as a key new residential use class, with over 2,500 units now in the pipeline in Edinburgh and Glasgow,” said Stuart Montgomery, director of lettings at Rettie & Co.
Citylets offered the following insight into markets in Aberdeen, Edinburgh, Glasgow and Dundee:
Not only did Aberdeen’s rate of decline ease further this quarter from minus 11.2% to minus 5.2%, positive growth was recorded for four-bedroom properties, the first uplift for any property type in the city for nine quarters.
The average rent in Aberdeen is £788pcm, £1 below the national average but £33 above Glasgow where speculation had mounted as to whether it would become Scotland’s second priciest city.
Results from Q3 will provide further insight but whilst Glasgow is set to continue to rise, Aberdeen may well yet remain above it.
Lisa Brebner of Stonehouse letting said: “There is also evidence to suggest that the decrease in rental levels is now beginning to stabilise. Stock levels in Aberdeen remain high, however, generally a well presented and fairly priced property will let quickly.”
Positive annual growth in the capital has been recorded every quarter now for the last 8 years. The average property to rent in Edinburgh now stands at £1,037pcm and represents a new all time high.
The Citylets Index for the city stands at 138.8, circa 4% growth per year since the start of 2008 but averaging around 6% since 2012.
With the peak Q3 period now underway, it would surprising to report anything other than new heights next quarter. Once again, good news for landlords but concerning for tenants.
Glasgow has seen its PRS acquire the same growth characteristic as its central belt neighbour with year-on-year gains regularly in the 4-5% region.
Average rents in Glasgow now stand at a record £755pcm, up 5% on this time last year. All property types recorded positive gains with 4 bed properties rising 10.1% over the year, 29.3% over three years and a substantial 42.7% over five years.
The average rate of growth for Glasgow citywide rents is 5% over the one, three and five-year term. For a city with deep roots in public sector housing, this marks a clear change for the region.
Markets in other major locations around Scotland such as Dundee rose by 1% y-o-y. West Lothian, South Lanarkshire and Renfrewshire all rose by the same amount representing a deviation from previous quarters but, in the case of West Lothian in particular, unlikely to represent any systemic long term change.
The outlook for Scotland’s PRS would seem to be one of continued growth in major urban areas.