Property Investment in Glasgow - is it Still ‘Miles Better’?

Glasgow is Scotland’s second city – that’s certainly what you’d say if you’re from Edinburgh. Those hailing from the western metropolis itself see things very differently, and they may be right!

I looked at Glasgow and its opportunities two years ago in our blog ‘Property Investment In Glasgow, Everything You Need To Know’ and despite the difficulties of the intervening years, Glasgow continues to soar.

Much of what I highlighted then holds true today. Glasgow is a dynamic city, steeped in history but bustling and vibrant. Edinburgh may be the seat of political power, but Glasgow could be regarded as Scotland’s economic powerhouse.

TIP: If you don’t know anything about Glasgow, unlikely though that is, check out my blog above for an extensive overview of the city and its attractions.

Glasgow continues to court and win major investments according to InvestGlasgow. There is a continuing emphasis on high tech growth, FinTech and property and infrastructure development. Many, it seems, are ready for property investment in Glasgow.

The presence of no fewer than five institutes of higher education means there is a ready supply of industry/academic collaboration and growing career opportunities for graduates within the city itself.

There are also tens of thousands of students seeking rented accommodation every year, a demand which the universities and colleges cannot meet on their own.

Glasgow’s property market

Property, both rental and retail is in high demand in Glasgow, and prices and yields reflect this. I’ll start with some numbers from CityLets covering Quarter 3 in Scotland. It’s a story of rising rents and dramatically falling time-to-let. The average rental price for a 1 bedroom is £786pm, 2 bed £1087pm, 3 bed £1537pm & 4 bed £2095pm with an average time to let standing at just 13 days. 

Additional research conducted by Showhouse in their update to UK-wide rental demand shows Glasgow and Cardiff leading the pack with increased demand standing at 22.1%. 

That performance is substantially better than the locations which find themselves in the lower half of the top ten, with demand still rising but at closer to 15%. So why are rental properties in Glasgow in such high demand?

Supply vs demand

Like many other locations, the supply of good rental and retail stock continues to lag behind demand, driving up values.

In an article in ‘Glasgow World’ from October 2022 a number of those involved in the property market offer their opinions as to why this is the case. Thomas Ashdown of Citylets offered his view on the continuing strength of the Glasgow market;

“City living is back. During the pandemic, growth slowed in most cities and accelerated in surrounding areas…now people are back to office working…confident there won’t be any more full lockdowns”.

For one-bedroom properties, postcodes G12 and G13 are currently experiencing high demand. In the West End, time-to-let (TTL) is only seven days, with Anniesland and Yoker only one day more at eight days.

Two-bedroom  properties in G13 saw a TTL of a mere five days, with properties in G1 (Merchant City, St Enoch’s) and G4 (Calton, Cowcaddens, Kelvinbridge) postcodes delivering an average TTL of nine days.

This suggests a buoyant market and for those interested in property investment in Glasgow this appears to be the case. This is supported by the latest report from the Office for National Statistics published in July 2022.

Scotland overall continues to outperform England and Wales, with rental prices peaking at 3.2% as of July this year. This is reflected in rental yields which average 8% according to a  report in ‘The Scotsman’ of 19 August 2022.

Build to Rent (BTR) continues to make inroads, albeit relatively slowly at present, with what has been billed as ‘Glasgow’s largest build to rent’ development getting the green light from the City Council.

Earlier, in March this year, the council also approved plans for a build-to-rent development of 350 new homes on Cathcart Road in Glasgow. Both of these developments will use previously derelict land.

House Prices in Glasgow 2022

When I wrote about Glasgow two years ago, the average house price according to HM Land Registry was £136,054. In 2022 that price is now £177,812 representing a 30.7% increase on the 2020 figure.

According to the same source, property prices in Scotland are rising at an annual average of 9.7%, with Glasgow itself showing a rise of 9.4% between 2021 and 2022.

The same pressures of supply and demand which affect the rental market are present in the retail market, which is hardly surprising. Unfortunately there are other factors at play making the future slightly less certain.

It’s not all fun and games on the banks of the Clyde

The rift between supply and demand is having serious consequences in Glasgow and throughout Scotland at present. Quoted in Property 118, John Blackwood, the chairman of the Scottish Association of Landlords (SAL), strikes a warning note:

“As SAL has warned for over a year, a chronic shortage of supply of rented properties caused by landlords leaving the sector is driving up rents”.

“Damaging rhetoric and policies from the Scottish Government are a significant factor in landlords choosing to exit the sector”. You can read John’s full remarks in ‘Glasgow: A warning to all landlords in the UK?’

Glasgow is crying out for rental property, one letting agency reported just under one thousand applications for a single bedroomed property. Again, landlords leaving the sector was cited as a major factor.

This is before the recent problems in the financial markets which saw mortgage products, including buy-to-let mortgages, being withdrawn by several lenders, are taken into account.

From a buyers perspective, recent headlines haven’t been encouraging, warning of dramatic increases in mortgage rates and falling property prices with increasing gloom due to cost of living increases.

I’m not going to downplay the effect on both tenants and landlords of the current economic climate, but lurid headlines are click bait and should be treated as such.

Advice from the property pros

While I steer clear of mindless optimism of the ‘keep calm and carry on’ variety, a sense of perspective is a fundamental requirement at present, and not just where the property market is concerned.

With demand high, there is great potential for landlords willing to invest in Glasgow however market uncertainty might make you pause for thought. It’s times like these that the help of professionals is invaluable.

Getting your numbers right before committing is simply good sense, and it’s even more important at present. Knowing the buy-to-let market as well as we do, we can reassure you before you make any commitment.

Anyone considering investing in Glasgow’s property market should remember that it is cosmopolitan and widely varied. Average prices are just that, and there are always bargains to be had if you know where to look.

In summary

The rental market is as vibrant as the city itself, and has just as much potential. The challenges it faces are mirrored elsewhere in the country, they’re not exclusive to Glasgow.

The private rental sector is our world, and we have decades of experience in it. Property investment in Glasgow by means of buy-to-let property is a sound proposition, especially in the medium to longer term.

Give us a call to discuss your needs, or just to explore the opportunities that are already there. You’ll find our advice impartial, honest and refreshingly straight-forward!

Written by Ross MacDonald, Director of Sales & Cofounder of Portolio

Get in touch on 07388 361 564 or email to [email protected]