The latest analysis of the private rental market by Citylets shows that in the second quarter of 2013 average monthly rents in Scotland rose by 3.1% over the year.
This was above the Consumer Price Index (CPI) measure of inflation for May of 2.7%.
The analysis indicates that, while Scotland’s property sales market remains flat, the rental sector is flourishing. Citylets said there is strong competition among tenants for properties driving up rents across the country. Average house prices have fallen slightly with the most recent Scottish house price figures from the Office of National Statistics (April 2013) reporting an annual decrease of 1.2%. The firm said this indicates an improvement in yields for those looking to invest in the Private Rented Sector.
The largest Scottish cities all saw rises in rents over the year. Edinburgh was up 3.4% at £818 while Aberdeen jumped 7.3% to £967. Rents in Aberdeen now are higher than they have ever, while Glasgow experienced below inflation rent increases of 1.5% to £618 while Dundee the most affordable city in Scotland to rent saw a jump of 5.2% to £565.
Dan Cookson, market analyst with Citylets, said: “The Scottish rental market has certainly warmed up this Summer with increases in volumes and prices of rental property at both the national level and city level. This increased demand for rental property has also been seen in Citylets site traffic with 20% more visitors in the first half of 2013 compared to 2012.
“We’re seeing continued growth in most regions and this has been fuelled by the fact that many would-be property buyers are continuing to find it difficult to purchase their first home. Tighter lending requirements and higher deposit requirements remain a problem for many people who cannot secure the necessary funds to purchase a property, so they are choosing to rent until they can make the step onto the ladder.”
Cookson added that with new build completions in Scotland at historically low levels and vacant stock within the social rented sector not meeting demand from a growing waiting list it is, in his opinion, no surprise that the Private Rented Sector has expanded in the way it has over the last 10 years.
He said: “However, there are also demographic changes taking place with more household formation in Scotland, particularly among smaller one and two-person households which will put additional pressure on the private rented sector going forward.
“This means that prospective tenants will be in greater competition for rented accommodation – which in turn will drive up rents unless supply of quality rented stock is increased accordingly.”