ESPC, the leading property portal for Edinburgh, the Lothians, Fife, and the Scottish Borders, is forecasting a robust 2026 for the property market across Edinburgh, the Lothians, Fife, the Scottish Borders, and Dumfries & Galloway, with falling interest rates and improved affordability set to drive activity throughout the year.

Following a Q4 2025 lull caused by Westminster budget uncertainty, ESPC anticipates strong pent-up demand will fuel early-year momentum, with property prices expected to rise by around 3.5% and interest rates potentially reaching 3% by summer—the lowest level since 2022.

Paul Hilton, CEO of ESPC, said: “2025 reminded us that the property market rarely follows a predictable path, but I’m genuinely optimistic about what 2026 holds. The combination of falling interest rates, wage growth outstripping house price increases, and pent-up demand creates real opportunities—particularly for first-time buyers who will play a pivotal role in keeping the market moving. While we expect a brief pause around the May Scottish Parliamentary elections, I believe the underlying fundamentals point toward a year of steady, sustainable activity across all our regions.”

With Goldman Sachs predicting base rates could fall to 3% by summer, ESPC expects significant improvements in buyer confidence and purchasing power. Wage inflation currently sits at 4.6% compared to predicted house price growth of 3.5%, creating genuine affordability gains for households across Scotland.

ESPC Mortgages reports growing optimism as lower rates open up more opportunities for buyers, particularly first-time purchasers who may now secure homes closer to valuation rather than paying significant premiums. They note that while interest rates are unlikely to return to early-2020s levels, reductions throughout 2025 and the projected easing in 2026—potentially to around 3.25%—create a more affordable lending landscape. The team remains positive about a competitive mortgage market and their ability to support clients through these improving conditions.

ESPC expects first-time buyers to be central to market health in 2026. With property fall-throughs currently running at 10%—up from 7% in 2021—sellers are becoming more discerning in their buyer selection, increasingly favouring chain-free purchasers with solid mortgage approvals over simply the highest offer.

This shift, combined with improved mortgage accessibility and lower borrowing costs, creates favourable conditions for those taking their first step onto the property ladder.

The Scottish Budget announcement on 13 January is expected to have minimal direct impact on the property market, following a similar pattern to the UK Budget in 2025. However, the May Scottish Parliamentary elections may cause some buyers and sellers to pause decisions until results are known, with ESPC anticipating a summer boost to activity as clarity returns.

The organisation continues to advocate for LBTT reform, including updated band thresholds and zonal taxation linked to property location, alongside increased support for first-time buyers in high-price areas.

ESPC Lettings expects demand across Edinburgh to remain strong in 2026, with one-bedroom flats continuing to be the most popular rental option. They anticipate that rental prices will begin to stabilise following post-Covid increases, and believe that greater clarity from the Scottish Government on proposed rental reforms may encourage more investment landlords to re-enter the market, supporting a healthier balance of supply and demand.

Early signs of increasing interest are emerging across all ESPC regions. Edinburgh is expected to see steady price growth, the Lothians will benefit from buyers seeking space near the capital, while Fife may see particular uplift as improved affordability encourages first-time buyers and second-steppers. The Scottish Borders and Dumfries & Galloway remain attractive for lifestyle-driven moves and relocations.