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Edinburgh's growth is good for the whole of Scotland - David Alexander

David J Alexander

With Edinburgh about to welcome the world to its festivals next month the capital has had an extraordinary decade of growth which has resulted in rapidly rising house prices and rents. Edinburgh’s international status means that it attracts people to live and work from across the world, resulting in a population growth far in excess of the rest of Scotland.

In the decade to 2021 Edinburgh’s population grew by 10.2 per cent compared to a rise of 3.4 per cent for Scotland as a whole. The working age population grew by 8.6 per cent during this period compared to 0 per cent growth for the rest of Scotland.

The bulk of this population growth is in overseas migration and Edinburgh has the highest growth of any of the largest eight cities in the UK excluding London.

With 82.2 per cent of the population economically active Edinburgh tops all UK cities including London on 78.6 per cent and Glasgow on 73.6 per cent. The capital’s unemployment rate of 2.6 per cent is the lowest in the UK and its median hourly pay of £17.70 is the highest outside London.

The news gets even better as the figures show that the capital has the largest percentage of high skill jobs in the UK with the most graduates (79.5 per cent) of any city producing the highest GVA per capita of £48,300 of any city in the UK apart from London.

The bulk of the high GVA (£6.1bn) comes from finance and insurance services with real estate activities the second highest producer of value at £3bn annually. Edinburgh has the highest value residential property market in Scotland, with sales in the capital representing 46 per cent of the residential market value of all Scottish cities.

What this has produced is a city that is growing rapidly with the surrounding areas around Edinburgh producing major housebuilding programmes and prices rising steadily.

The gap in house prices between Edinburgh and the rest of Scotland has grown enormously, with the average price now £327,751 in the capital compared to £191,435 across the rest of the country. That is a difference of £136,316. The difference with Glasgow is even greater rising to £151,696.

When you examine average prices for detached homes the gap between Edinburgh and the rest of Scotland is more marked. A detached home in Edinburgh is now £715,794 on average while in the rest of Scotland is £336,060 lower at £379,734.

This is an extraordinary difference between the capital and the rest of Scotland and there is a risk that Edinburgh becomes unaffordable for people moving into the city in the future, but appropriate action now will ensure the capital remains accessible.

Encouraging greater investment by property investors and support for landlords would produce a steady flow of suitable homes for the well-educated, well paid, working age people flooding into the city keen to live and work in a dynamic and lively location.

To mitigate wider demand there needs to be more housebuilding generally and a substantial increase in the volume of social housing is essential. Amazingly, Edinburgh has a further advantage over the other major cities in the UK in that it is the least densely populated, allowing for further building in the future. A growing Edinburgh is a positive sign of a growing Scotland.

David Alexander is CEO of DJ Alexander Scotland Ltd

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