The latest Citylets quarterly report saw the Scottish Private Rental Sector (PRS) reach a new record high in Q2 2017 with average rents up 1.5% year on year (YOY) to £789 on average.
Growth was underpinned by continued strong uplift in the key conurbations of Edinburgh (5.2%) and Glasgow (5%), where markets have reached respective all time highs, and with reduced drag from Aberdeen which continues to even off this quarter.
Commenting on the findings, Citylets MD Thomas Ashdown said: “Our latest report underlines the metronomic strong growth in Scotland’s largest cities. Edinburgh has recorded positive annual growth every quarter for a full 8 years and averages 6% over the last 5 years. Glasgow is up 5% on average over the same period.”
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 4 bed properties, the first uplift for any property type in the city for 9 quarters. The average rent in Aberdeen is £788 per month, £1 below 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 Lettings 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 £1037 per month 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 Private Rental Sector acquire the same growth characteristic as its central belt neighbour with YOY gains regularly in the 4-5% region. Average rents in Glasgow now stand at a record £755 per month, 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 3 years and a substantial 42.7% over 5. The average rate of growth for Glasgow citywide rents is 5% over the 1, 3 and 5 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% YOY. 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 Private Rented Sector would seem to be one of continued growth in major urban areas.
Stuart Montgomery, Director of Lettings at Rettie & Co, highlighted the timely rise of Build To Rent in the Scottish region: “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.”