Following a turbulent period in 2022 and early 2023, the Scottish property market and in particular Glasgow, Edinburgh, and their surrounding areas have shown remarkable resilience, marking 2024 as a year of stabilisation and growth.
After the tumultuous end to 2022, caused by the rise in interest rates and market uncertainty triggered by Liz Truss’ disastrous Mini Budget, 2023 proved to be a more difficult year for the property market than hoped with sellers hesitating to list and buyers finding themselves facing significantly higher mortgage rates than they had experienced in recent years.
However, this year has seen more stability in the market, driven by falling interest rates and external factors such as a rise in population numbers. A recent report from the National Records of Scotland noted that in the past year to time of publication, Scotland’s population had risen faster than at any time since the 1940s, noting that the main driver of population growth came from individuals moving to Scotland from abroad and other parts of the UK.
This increase, along with overseas investors buying portfolio properties in Edinburgh as opposed to London, in part is driving up demand in the first-time buyers’ end of the market, which is then pushing demand up for the entire market which for many years has seen prices driven in part by a shortage of good quality stock.
The major estate agents in Edinburgh and Glasgow have almost uniformly noted that 2024 has been neither a classic sellers’ nor buyers’ market, in Edinburgh and the Lothians in particular. For the most part, there has been a steady balance of supply and demand allowing home movers the luxuries of time and choice.
Edinburgh: A market of resilience and growth
Edinburgh has long been a desirable location for property investment, and 2024 has been no exception. The average house price in the city reached £347,000 in September, a 7.7% increase from the previous year. This growth outpaced the national average, highlighting Edinburgh's strong market performance.
The rental market in Edinburgh has also seen significant activity, with private rents rising to an average of £1,383 per month, a 13.1% increase from the previous year. This rental price surge reflects the city's high demand for housing, driven by its robust job market and excellent educational institutions.
Glasgow: A market of opportunity and renewal
Glasgow has also experienced a positive year in the property market. The average house price in Glasgow has increased, although not as dramatically as in Edinburgh. The rental market in Greater Glasgow however has seen the largest increase in rent prices, with an annual rise of 22.3%.
Looking forward to 2025
As we look ahead to 2025, a key factor in how the market grows will no doubt be influenced by the recent change to the Second Home Tax or Additional Dwelling Supplement, matching London’s recent 2% hike, taking Scotland to 8% and maintaining the 3% gap between nations.
There is no doubt that this rise will greatly impact the rental sector in particular and has been met with widespread condemnation across the legal and estate agency community.
The Scottish Government's ongoing efforts to address housing affordability and supply will play a crucial role in shaping the market.
However, with a 2026 Scottish election looming, housing policy is likely to be a key battleground on the campaign trail throughout the coming year, with Edinburgh accounting for almost one-third of Scotland’s councils declaring a housing emergency in recent months.
Overall, the Scottish residential property market has shown remarkable resilience in 2024, and the outlook for 2025 remains positive despite the recent tax change.