2024 Market Review
A fair choice of word to describe the residential market in Edinburgh in 2024 would be steady. From a personal perspective, I noticed that many of my valuations were achieving sales prices close to my HR value. ESPC confirmed this, reporting that the average buyer paid 102.2% of the HR value in 2024. This is a shift from the post-COVID years when prices were often well above HR, around 10-20%. As I mentioned in my 2023 market update, the Edinburgh market certainly needed some re-adjustment following the rapid price increases post COVID. One key takeaway for the year is that, although we saw smaller premiums being paid, properties were still selling! It is clear that getting the HR value correct remains essential, particularly in properties that require capital investment. When priced incorrectly or too high, these properties took longer to sell and were often marketed at fixed prices.
2025 Outlook
Already in 2025, we’re seeing a noticeable increase in the number of properties coming to market year on year. January has been particularly busy for us at Graham + Sibbald, suggesting growing market confidence. That said, the market remains reactionary. Buyers are acutely aware of the ongoing economic and inflationary pressures. How these factors evolve will likely shape the year ahead. If the Bank of England continues to lower the base rate, as anticipated, we’ll likely see increased market confidence and more transactions. On the other hand, if inflationary issues persist, buyers may remain cautious, even if transaction volumes hold steady.
It will be interesting to see how the introduction of VAT on private school fees (introduced on the 1st of January 2025) will impact sale prices in already competitive catchment areas, which are likely to become increasingly sought after. Given that Edinburgh has one of the highest concentrations of privately educated children in the UK, it is likely that proximity to well-rated schools will carry even more weight in a family’s home-buying decision.
The increase in the Additional Dwelling Supplement (ADS) from 4% to 6% is likely to continue to exacerbate pressures on the rental sector. Would-be landlords are likely to invest elsewhere, whilst existing landlords who operate on a smaller scale are likely to choose to sell up due to the cost of increasing the size of their portfolio. This, coupled with the always evolving rental legislation does place further pressure on landlords. I would therefore predict that we will continue to see rental demand outstripping supply in 2025. This is likely to push more renters to purchase, should they find themselves in a position to do so, whilst rents will undoubtedly rise.
Last year, many of us were hopeful for larger rate cuts from the Bank of England, but those cuts didn’t materialise as hoped. Perhaps we’ll have more luck this year with experts predicting several cuts. With the base rate currently at 4.75%, a reduction of anything below 4% would be welcome. However, it is being widely reported that the Bank of England could implement as many as six rate cuts, potentially taking us down to as low as 3.25% which would be terrific news for borrowers and would give the market a well-needed boost.
Final Thoughts
In conclusion, the Edinburgh property market in 2024 has seen steady demand, with property prices stabilising and the rental market remaining competitive. I do like to end my market updates on a more positive note, and there seems to be a bit of a pattern emerging. Whilst we continue to navigate through difficult economic climates, the Edinburgh market remains resilient as ever and continues to keep ticking along. In an industry where positive market sentiment is important, it is good to know that confidence is growing.
Average Residential Sale Price: 2024
£299,564
Average Residential Sale Price: 2023
£293,750
Average Residential Sale Price 23/24:
+2%
Average Percentage of HR Achieved: 2024
102.2%
Average Percentage of HR Achieved: 2023
103.1%
Average Percentage of HR Achieved: 2023
-0.9%
