Residential Market Overview Edinburgh and the Lothians

By Fergus Mair

To help understand what in my view will happen in 2025, it is important to understand the 2024 market. At times in 2024 it felt that the property market was sluggish. However, this did not transfer to sales volumes, which remained flat in Scotland and increased in Edinburgh and the Lothians. Nor did this apparent sluggishness transfer to sales prices, which grew broadly in line with inflation across the regions. It’s never particularly helpful to generalise about Edinburgh and the Lothians as there have been different levels of growth, depending on the type of home and area. Some readjustment was entirely expected given the huge house price inflation (family homes primarily) that some areas benefited from. Agents found it more challenging, but each home did find a buyer. Premiums over and above Home Report value were still evident but were broadly for homes that were in excellent order. Those requiring work or were overvalued found it more challenging. It was notable how many dwellings were listed at Fixed Price before selling. To describe 2024 as a marginal buyers market would, I think, be fair. This was a year when the property market caught its breath. Crucially first time buyers homes transactioned strongly, forming the foundation for a healthy property market.

2025 will still have many of the same market pressures. Inflation has proven to be rather sticky. The rate cuts expected in 2024 were not as fast at arriving as many predicted and this may well continue to be the case in 2025. The four quarter rate cuts expected over the year perhaps look a little bit ambitious. The Bank of England Base Rate has however peaked in the medium term and that understanding allows people to budget with more confidence. I would expect premiums to be paid over Home Report value on excellent homes but that we will see the same weakness in tired dwellings or those that are overpriced. Pricing, as 2024 showed, will be key. This year the wider population will also be more aware of the changed market conditions from the heady heights of 2021 to 2023, this readjustment of expectations should allow for a smoother process from listing to sale.