By Ian Gray, Morton Fraser
For the majority of the time, the property industry resembles a slow lumbering machine. So it’s fascinating when suddenly, out of the blue, there’s a significant swing in economic supply and demand.
Only a few years ago, the housing market was stagnating at all levels, and new build developments were struggling to achieve any sales. Today, it’s a completely different story.
From the end of 2012 to the beginning of 2013, we found that the average selling time for a residential property was over 14 weeks. In contrast, as we came out of 2013 and into 2014, we started to see this time decrease significantly. In some hotspots like Edinburgh, Glasgow and Aberdeen, some properties have been selling in less than two weeks of being put on the market.
However, it hasn’t all been plain sailing. Many people who bought at the height of the market in 2007 still find themselves in a position of negative equity. Those who own older properties here in Scotland are finding it hard to sell, as the Help to Buy scheme for new build homes pulls prospective purchasers away. On top of this, the stamp duty clampdown in the 2014 budget is predicted have an impact in some areas.
While not back to the levels of 2007, we are starting to see lenders make funding more readily available at reasonable loan-to-value levels, by relaxing their criteria. This is having the effect of stimulating the lower end of the market, as first time buyers step onto the property ladder.
Property as an investment
There also seems to have been a recent shift in attitudes towards homeownership, across all sectors of the market. The desire to be an owner-occupier is not as strong today as it was in the post-Thatcher years. We are now seeing an increasing number of first-time buyers purchasing property as an investment, rather than as somewhere to live. This is being driven by a wide range of factors, such as the transient nature of the younger generations, who traditionally would be entering the market for the purposes of owning a home.
So what does this all mean for quality new build developments in Edinburgh such as Quartermile, where Morton Fraser is based?
Firstly, from the local purchaser’s point of view, Quartermile is seen as a high quality development with an emerging community feeling in a thriving capital city. Although initial capital expenditure might be relatively high if you invest in Quartermile compared with more traditional alternatives, rental demand for new build properties is currently strong and providing attractive yields.
Edinburgh: An alternative to London
If people take a medium to long-term view on their investment, when the Quartermile development is complete, some capital growth may be gained. Foreign investors are looking to developments in Edinburgh as a sound investment alternative to London.
Like London, Edinburgh is a cosmopolitan city with a thriving business community and a world-renowned university – but investors don’t have the same high capital expenditure. This, coupled with the rental demand continuing to rise, means now is an excellent time to either step onto the property ladder, move house or invest in residential property in Edinburgh.
For more information about the Edinburgh housing market, buying a home or selling your existing property, contact Ian Gray at Morton Fraser on 0131 247 1012 or email