Residential property prices and private rents in Scotland’s cities are expected to rise sharply in the next five years due to a lack of new homes being built, according to a new report.
With the number of new homes being built across Scotland still significantly below the level needed to meet demand, property consultancy JLL predicts that house prices and rents will continue to rise between 2017 and 2021, especially in key city centres where demand for homes is outpacing supply.
According to the study, home prices in Edinburgh will surge by almost a quarter - 23.4% - by 2021, almost double the UK average, and 4% more than London.
In Glasgow, where many properties cost less, a 15.4% rise in the corresponding period is forecast, ahead of the average increase in Scotland of 10.9%.
The supply-demand imbalance is also expected to drive up rents, with JLL forecasting that by 2021 tenants will pay 20% more to rent property in Edinburgh and 17% more in Glasgow.
Jason Hogg, director of JLL’s Residential team in Scotland, said: “Housebuilding in Scotland continues to persevere against the backdrop of political uncertainty. The industry is in a confident and optimistic mood, buoyed by strong demand for residential in key city centres.
“However, there’s no doubting that the key challenge for the year ahead is to address the shortage of supply. It’s not simply a case of housebuilders increasing their outputs. We need to create a better planning environment at both a local and national level which facilitates this aim, increasing the supply of land and helping rather than hindering the residential development planning process.”