Edinburgh could be a hotspot for buy to let investment, as property prices are expected to rise by 23 per cent over the next four years.
The forecast has been made by JLL property consultants who have said that a lack of new residential properties being built in Edinburgh will be a key factor in pushing prices up.
JLL director of residential and development property, Jason Hogg, said: ‘With demand for housing outstripping supply, particularly within Edinburgh city centre, rental and house prices are forecast to outstrip the national average by 2021.’
He continued: ‘Residential construction activity is being starved of development opportunities, made clear by a lack of cranes across the skyline, suggesting the tide isn’t set to turn dramatically in the next four years
The price rise is expected to affect properties at the lower end of the market most, with average prices for one bedroom flats rising by around £30,000 to over £150,000 and two bedroom flats in the upmarket West End reaching nearly £400,000.
Managing director of city estate agents DJ Alexander, David Alexander, said that first time buyers are going to find it most difficult to purchase property.
He said: ‘It’s far more difficult to get a mortgage than it has ever been. The criteria are far tougher and you need a substantial deposit. It’s not easy getting on the housing ladder and as prices increases it will become even more difficult.’
He added: ‘That’s why the rental market is so buoyant – there’s nothing else people can do.’
Various plans have been put forward for housing developments in the green belt, but it is not thought that these will make much differtence in the short term.
Mr Alexander commented: ‘It takes time for homes in new developments to come through and the population is increasing faster than they can build houses.’
He also confirmed that lower priced properties would be most affected by price increases, saying: ‘The market at the bottom end is certainly increasing. First-time buyers looking for something between £100,000 and £200,000 are likely to see prices increase – as they have done over the last couple of years.
‘The demand is there, but not the supply. Anything we put on the market in that bracket is very popular.’
It seems there are opportunities for buy to let investors to make the most of the strengthening private rental sector in Edinburgh.