Current Market Overview
2025 was predominately a steady year for the Edinburgh residential property market. The year started positively, however Q4 was somewhat lacklustre with uncertainty around the UK Government budget prompting many people to delay moving. Winter is not yet over, however there are clear signs that the pent-up demand created during the quieter Q4 period is now beginning to trigger market activity as we look ahead to Spring.
ESPC statistics from the end of January show that overall listings were up 4.3% compared with January 2025, with listings at Gillespie Macandrew ahead of where they were a year ago. We have set several closing dates and received strong bids, with some clients achieving well in excess of Home Report valuation. Our median days to ‘under offer’ has also improved significantly.
Family homes, particularly those that are well maintained, continue to perform strongly, with school catchments remaining a key driver in influencing buying decisions. City flats and properties that appeal to first time buyers are currently outperforming the broader market. These properties are generating the greatest demand and adding some much-needed energy to what might otherwise be described as a fairly tepid market.
One of the biggest challenges in the market is the prevalence of chains. This reflects a more cautious approach, with many buyers reluctant to market their own property until they have secured an offer for their onward purchase. While understandable, it does mean that in Scotland we are moving closer to the English system, which brings its own issues. Missives frequently conclude at the last minute, and a single problem with one link can have a catastrophic effect on the entire chain.
2026 Market Outlook
The latest base rate reduction has further boosted market confidence, with further cuts expected during 2026 and a corresponding positive impact on mortgage interest rates. Improved affordability should help more first-time buyers to take their first step onto the property ladder.
The Scottish Election is just around the corner, and with Scotland in the midst of a housing emergency, we can expect extensive discussion in the coming weeks and months about how each political party intends to tackle the main challenges, from the delivery of affordable housing to improving energy efficiency in homes. We also anticipate debate around potential reform of Land & Buildings Transaction Tax (LBTT) and Additional Dwelling Supplement (ADS), particularly in light of the Conservative party pledge to abolish Stamp Duty Land Tax (SDLT) if elected in the next UK election. It is worth noting that buyers in Scotland face higher LBTT than our English neighbours, and those purchasing “additional dwellings” here must pay a further 8% tax on the purchase price, compared with 5% in England.
Periods of uncertainty typically slow the market, at least temporarily. Despite significant uncertainty over the past few years, the Edinburgh market has proved remarkably resilient. It seems therefore unlikely that the Scottish election will significantly impact overall market performance, although a short period of reduced activity is expected until the outcome brings clarity. More concerning are the wider global pressures and geopolitical threats that dominate the headlines and the ripple effects these could have on the housing market.
Mansion Tax: Market Implications
The recent Scottish Budget confirmed that the Scottish Government will follow UK Government in introducing a “mansion tax”. From 2028, two new Council Tax bands will apply to properties valued above £1 million. It was quite clear that Scottish Government would not follow the £2 million threshold introduced in England and Wales given the relatively low number of properties at that level. However, the £1 million threshold captures a significant number of homes, particularly in Edinburgh, with an estimated 12,000 properties affected.
So how might this impact the market? For most buyers, the increased tax will be absorbed into general running costs, rather than being a decisive factor in purchasing decisions. The measures may, however, incentivise some older homeowners or those who are asset-rich but cash-poor to downsize. If so, this could help release more much-needed family homes onto the market, something that would be welcomed, particularly given the current challenges with property chains.
Overall, 2025 proved to be a steady year and 2026 is expected to follow suit, with modest growth anticipated as the pent‑up demand already emerging continues to flow into the market.
If you are looking to move in 2026, get in touch with our Residential Property experts to discuss your next steps.
