Capital growth AND rental yields are higher outside Edinburgh! Time for an investment re-think?

In Edinburgh, I am speaking to more and more landlords, be they seasoned professional landlords or FTL’s (first time landlords), as they read the Edinburgh Property Blog that shows that the Edinburgh rental market is doing reasonably well, with rents and property values rising. 

When I was having a chat with one of these landlords over a latte in Cafe Contini the other day, he asked me two completely unrelated questions that got me thinking.  The questions were, how much faster are Edinburgh property prices rising than in towns around about Edinburgh and how much he should be paying per square foot?

Interestingly, we both thought that obviously Edinburgh property prices would be rising faster than towns around about but, going by my mantra of ‘never assume nuthing’, I did my research and was astounded by what I found.

Over the last twenty years, property values in Edinburgh have risen by 258.42% whereas they have actually risen by more ..... yes more ..... in town around about Edinburgh – Grangemouth property values rose by 267.24% in this period, Falkirk property values by 266.67%, South Queensferry by 259.21%, Linlithgow by 259.17%, Penicuik by 259.19% and Dalkeith by 259.17% with only Musselburgh property values rising by less than Edinburgh’s at 253.84%.

This is an astounding result as it turns the historical view of the capital growth vs income see saw on its head.  The capital growth vs income see saw says that the higher the capital growth the lower the rental yield and vice versa. 

However, the property values research I did means that not only has capital growth been greater in towns around about Edinburgh, but your investment money also goes further there as properties in these town are cheaper than in Edinburgh meaning there will be higher a rental yield – rental yields can easily be 6-8% per year in these towns whereas in Edinburgh you are lucky if you get 4-5% per year.

So is it time for Edinburgh landlords to have a re-think and consider buying properties outside Edinburgh?

What about the ‘how much he should be paying per square foot’ question I hear you say?  Well, that’s a topic for a future blog post .... watch this space.

Whether you are a landlord, a ‘Homes Under the Hammer’ addict or just a homeowner who is interested in what is happening to the local property market, then please visit the Edinburgh Property Blog (www.edinburghpropertyblog.co.uk), contact me for a chat (phone on 0131 603 4570) or email me (edinburgh@thekeyplace.co.uk).

www.thekeyplace.co.uk