Are first-time buyers leaving Edinburgh to afford a home?
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Paul Hilton, ESPC chief executive considers whether first-time buyers are having to leave the capital to get onto the property ladder.
With rising house prices across the board, and especially in Edinburgh (ESPC’s latest house-price report shows the city’s average selling prices rose again during August, by one per cent to £317,070), it would be a safe assumption that first-time buyers might be exiting the capital in order to take their first step onto the property ladder.
This especially feels like the case when we know that over the last few years, commuter-friendly suburban towns such as Musselburgh and Bonnyrigg, and the city of Dunfermline, have seen many buyers relocating there, sacrificing a central location for additional space.
But is it actually the case that first-time buyers are feeling the pinch in the same way? According to our recent research, perhaps not.
We examined the sales of one- and two-bedroom flats in Edinburgh’s traditionally prime first-time buyer hotspots, covering neighbourhoods such as Leith and its surrounding areas, Stockbridge, Abbeyhill, Bruntsfield, Newington and Portobello, and compared them to sales of similar properties in these popular commuter towns, to see if there really has been a shift in first-time buyers relocating outside the city.
The results were surprising: headlines would have you believe that house prices are so unaffordable that first-time buyers would have no choice but to exit the city to secure a home of their own, but the figures tell a different story.
In fact, the story I see is one where first-time buyers will sacrifice space, or save for longer if they need to, to make it possible to buy a home in their ideal location. They aren’t willing to
compromise when it comes to where they live.
Sales of one-and two-bed flats in Abbeyhill rose nine per cent year-over-year, and in leafy
Inverleith, there was a 19 per cent increase in the number of starter homes sold. Those figures jump a lot higher when you shift eastwards to Leith: sales around Leith Walk rose 61 per cent, while around Leith Links, it was 64 per cent, indicating that first-time buyers were still hunting for flats in these neighbourhoods in their droves.
Some areas did see a stark dip in sales volumes, such as around Easter Road, where sales were down by 18 per cent annually, or in Stockbridge, where the figure lay at 27 per cent.
By comparison, sales of one-and two-bedroom flats in Musselburgh declined 21 per cent
over the same period. However, Bonnyrigg saw sales volumes rise by a healthy 10 per cent
for the same type of property, so this area may well be seeing increasing interest from buyers looking to get a bit more for their money.
Overall, it doesn’t appear that affordability pressure has skipped these out-of-town locations, as prices have continued to rise there too, meaning that buyers face the choice of buying a slightly cheaper property with a more expensive commute (Bonnyrigg hovers around
£170,000 on average) or paying a higher purchase price for a more centrally located home.
Of course, you may get more for your money outside the city in terms of a property’s proportions and overall condition, or added bonuses like gardens or parking spaces, but perhaps that isn’t as important to many young buyers as being in their favourite neighbourhoods in and around the city centre.
Interestingly, Dunfermline is considerably more affordable than any of the other areas in consideration, with an average selling price of £134,240 for a starter home (almost £100,000 cheaper than the equivalent property in Abbeyhill or Leith, and significantly cheaper than homes in Stockbridge, Inverleith and Bruntsfield, where properties can cost double this for a flat of the same size), but sales volumes have barely shifted, with a rise of less than one per cent (0.6 per cent) over the past three years.
So, wherever buyers are buying, it doesn’t appear that they are currently relocating
outside Edinburgh in particularly large numbers – especially not when sales volumes in ‘rising star’ neighbourhoods such as Gorgie and Dalry are up four per cent over the same period (unsurprisingly, average selling prices here sit much lower than their more established counterparts, at £190,086 – although still considerably more expensive than Bonnyrigg, and Dunfermline at least).
It seems as though, for the time being at least, it remains all about ‘location, location, location’ for buyers starting out, with Edinburgh remaining the goal for many about to take the property plunge.
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