ABERDEEN’S status as Scotland’s economic boomtown has been underlined by a detailed new study of Scotland’s rental property sector.
The scramble for accommodation in the Granite City is seeing rent rises far in excess of the rest of the country, with landlords benefiting from the unprecedented demand.
One bedroom flats are now so sought after they command an average monthly rent of £527 – outperforming the traditional pace setter, Edinburgh, where the average is £512.
Rental costs in Aberdeen have shot up by 12.8% in a year and 4% in the last quarter alone, according to the Citylets quarterly report on Trends in Residential Lettings, the only independent and detailed study of Scotland’s rental market, based on data from 25,000 annual lettings through 200 agents.
Thomas Ashdown, managing director of Citylets said: “The Aberdeen situation is quite unique in Scotland. With demand continuing to outstrip supply for one and two bed flats I’m afraid the news for tenants is not good and we predict further rent increases in the next quarter. “
Despite the increase in rental prices, the relative scarcity of properties in Aberdeen has meant a sharp drop in the average Time to Let (TTL) for properties, a key indicator of demand.
One bedroom flats are let on average within just 12 days, with half gone in a week and 90% snapped up within a month. By comparison, the average TTL in Edinburgh is 20 days and in Glasgow it is 32 days.
Thomas added: “This is our third quarterly report and Aberdeen has been the consistent star performer. Rents started to rise after the last interest rate cut in August 2005 and have been climbing ever since.
“While house prices in Aberdeen have risen about 50% since the third quarter of 2005, the increase in rents hasn’t been that far behind, with average charges for one-bedroom flats up 30.8% in the same period.
“Compare that with Edinburgh – in the same period house prices have climbed by around 25%, but rents for one bedroom flats have risen by just 5.3%.”
“The shortage of these types of properties would seem to be considerably more acute than in other Scottish cities.”
Aberdeenshire has been identified as having the best quality of life in Scotland, while a resurgent oil market has created a jobs boom in the city, with attractive salaries on offer.
Skill shortages in the energy sector and the knock on benefits in the hotel, leisure and other sectors has also attracted a migrant workforce – particularly from Poland – driving demand for rented property, while would-be first time buyers priced out of the market are also turning to renting instead.
Elsewhere, the Citylets report shows a modest, Scotland-wide rise in rents of around 1%, with demand for rented property likely to be sustained as housing market jitters and a global credit squeeze is seeing cautious tenants opting to rent instead of buying.
Across Q3 of 2007 the Citylets reports showed a healthy, Scotland-wide demand for rented homes, with 57% of available properties being successfully let within a month of coming on the market.
In Edinburgh the average rent for a one bedroom flat has reached £512, an increase of 2.6% on the previous year and a third of those are let within a week. For two bedroom properties the average rent has climbed 4% in a year to £668, with a quarter being let within a week.
The modest rise in rents allied with the slight decrease in time to let for most kinds of properties has seen Citylets predicting rental rates in Edinburgh will continue to increase across Q4.
In Glasgow a surge of buy-to-let investments in Scotland’s biggest city has effectively seen rents capped. The average rent for one-bedroom flats is £437 and for two-bedrooms there is £566 – a 0.2% annual increase. However a larger number of flats were let than is usual for the time of year perhaps suggesting heightened demand, albeit at the right price.
Thomas concluded: “The basic outlook is that we expect to see rising tenant demand over the next few quarters and higher rent inflation.”
www.citylets.co.uk was launched in 1999 and is Scotland’s most successful letting portal. Its quarterly report is the country’s only detailed and independent barometer of the rental market, and is used by investors, as well as potential tenants.