Property Prices – Comparison between Edinburgh and London 2019-2020

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"red sold sign" (CC BY 2.0) by Diana Parkhouse

The UK property market has stagnated considerably of late, with house prices remaining largely unchanged since July 2018. However, January’s figures bucked this trend, with property values increasing incrementally nationwide for the first time in one-and-a-half years.

This may be good news for investors, particularly those who want to enter the market before prices embark on a sustained upward trajectory. Even the ailing buy-to-let market still offers a viable opportunity in 2020, despite the uncertainty caused by Brexit and the potential threat posed to EU nationals who rent.

However, the question that remains is where should property investors turn their attention in the current climate? Both Edinburgh and London offer viable options, but which of these is better?

Edinburgh vs. London – Price and Rental Value

When comparing the property markets in these two capital cities, the most obvious difference is the value of homes within their boundaries.

The average house price in Edinburgh is currently estimated at 240,400, for example, with this figure having increased by an impressive 5.4% year-on-year.

Conversely, the average home in England’s capital city will set an investor back around £479,000, while annual pricegrowth also stagnated to a paltry 0.3% over the course of the previous 12 months.

For investors who intend to either ‘flip’ houses or secure a long-term store of wealth, these figures suggest that Edinburgh offers a far superior proposition. Not only are homes more affordable in this city, for example, but they also offer potentially higher returns to investors over an extended period of time.

Of course, London still remains a popular target, particularly for overseas investors who continue to snap up a high percentage of homes in order to leverage increased rents.

This brings us neatly on the topic of the buy-to-let market, which has lost some of its lustre of late thanks to Brexit and the gradual elimination of tax breaks for landlords.

However, London remains a popular metropolis for buy-to-let landlords, with the HomeLet rental index revealing that the average rent in the capital city increased by a whopping 4.4% in January 2020. London-based properties can also command huge monthly rents from professionals, creating significant profitability for investors both at home and abroad.

In fact, consumer prices including rent in London are a whopping 43.7% higher than in Edinburgh, highlighting a marked difference that’s impossible for certain investors to ignore.

So, while Edinburgh rental prices peaked at £1,107 per month and achieved an annual growth rate of 5.6% in 2018, it doesn’t offer quite the same margins to buy-to-let investors at present.

Are There Any Other Considerations?

Overall, average rents across the UK rose by a relatively paltry 2.3% in January 2020, and this highlights the incredible investment opportunities that exist for investors in Edinburgh and London (particularly those active in the buy-to-let market).

Edinburgh also offers immense value to more traditional and entry-level investors, who can secure relatively affordable properties and bank on strong annual growth to achieve long-term gains.

With the cost of living also considerably higher in London and continuing to rise, Edinburgh may benefit from increased demand in the near-term as the economic climate in the UK continues to worsen.

Ultimately, both of these locations are viable targets for property investors, and you should look to inform your choice based on your preferred investment vehicle and the precise nature of your financial objective