A report on the residential property rental market in Scotland’s two largest cities by Rettie & Co shows that Edinburgh is 26% more expensive than Glasgow, but the gap has narrowed sharply over the past two years.
Average rent in Edinburgh was £1,115 per calendar month in the second quarter of 2021 compared to £882 in Glasgow.
“Over 2018 and 2019, the average rental difference between the two cities peaked at 44%, above the long-term average of around 35%,” said the report.
“This sharp narrowing of premium between average rent has been a function of the unique circumstances impacting the Edinburgh market, particularly around the rise and fall of the short-term lets sector, while Glasgow has remained more consistent.
“A comparison of average rents on a £/sqft basis shows the difference between the two cities.
“The average £/sqft rate in Edinburgh’s City Centre is around the £19/sqft rate, weakening to low double digits in more outlying areas.
“In Glasgow, the desirable West End averages around £14/sqft. This represents a premium of over a quarter on the city on a £/sqft basis, where average £/sqft rents are in single digits in most areas.”
Rettie said that when the Covid-19 pandemic arrived and restricted flat moves, economic migration, tourism and student demand, the market in Edinburgh “cooled more dramatically” than Glasgow.
Despite the pandemic, Glasgow average rents rose 9% from £810pcm to £882pcm.
This has meant that, in the five years to Q2 2021, the compound annual growth rate in Edinburgh has fallen to 2.5% while Glasgow has remained consistently above 4.5%.
Another major difference between the two cities has been the rise of Airbnb and the short-term rental market.
“As a leading tourism centre and home to the world’s largest arts festival … Airbnb and the short-term rental market in the Capital has exploded in recent years, and this has had a noticeable impact on the rental sector,” said Rettie.
“In Glasgow, the number of Airbnb listings peaked at 3,616 in Q3 2019 before falling to 2,090 in Q2 2021.
“With 317,000 dwellings in the city, this represents a peak of just over 1% of dwelling being listed on Airbnb.
“By contrast, Edinburgh saw peak listings in Q3 2019 at 14,186 before falling to 6,795 in Q2 2021.
“With 255,000 dwelling in the city, this represents around 5.5% of the housing stock at peak being listed for short-term let.
“The change in demand for short-lets over the pandemic has had a far more notable impact on the private rental sector in Edinburgh, with more stock looking for residents while tourism and student demand has waned.”