Aberdeen Property Market Looks Brighter
Sales of residential properties are limited but improving according to Savills
Following the gently improving energy sector, Aberdeen’s area property market is looking brighter, with residential sales activity improving above £400,000 according to latest research from Savills. However, high levels of stock on the property market will limit value growth in the short term and the recovery remains fragile. Latest findings include the following:
- Values are stabilising and the level of transactions slowly increasing
- Suburban hotspots and commuter locations are leading the way in the recovery
- Prime properties (between £400,000 and £1 million) are outperforming the market
- There has been a return of buyers to the North East from outwith Scotland
- House price growth in Aberdeen is anticipated to rise by 4.5% by 2022
According to the UK House Price Index, Aberdeen City’s average house price fell by 19%, from £199,000 in September 2014 to £162,000 in February 2017. However, the peak-to-trough gap has narrowed slightly to 16%, with the average price picking up in recent months, reaching £165,000 in September. Meanwhile Aberdeenshire’s average house price fell from £203,000 in April 2015 to £187,000 in March 2017, but there was a subsequent increase to £192,000 in September.
Following a downward trend, the Aberdeen area as a whole is seeing the first sign of an upturn in transactions signalling a gradual recovery in buyer confidence: there had already been 5,994 transactions during the first nine months of 2017, a 2% increase on the same period last year. At the height of the market in 2014, there were 8,108 sales in Aberdeen.
Interestingly, prime properties (between £400,000 and £1 million) outperformed the market, with a 7% rise in transactions, with 218 such properties changing hands in the first half of 2017, compared to just 204 in 2016. The overall market above £400,000 is also attracting more buyers from outside Scotland, with the number originating from the rest of the UK almost doubling this year.
Suburban hotspots leading the recovery
Within Aberdeen City, the AB13, AB15 and AB25 postcodes led the recovery, with a 20% annual rise in transactional activity, supported by new build sales. These areas include the hotspots of Aberdeen’s West End and the sought-after suburbs of Bieldside, Cults and Milltimber.
In Aberdeenshire, the strongest growth in transactions is taking place in locations that are within easy reach of Aberdeen, including Portlethen and Westhill and also the hotspot of Banchory, which has one of Scotland’s top-performing state schools. Meanwhile, there was a 25% annual increase in the number of transactions in southern Kincardineshire, which includes Laurencekirk and Fettercairn. Transactional activity also recovered in the coastal town of Stonehaven, mainly between £200,000 and £400,000.
Fiona Gormley, Savills’ head of residential property in Aberdeen, said: “In times of uncertainty, buyers tend to be drawn to traditional hotspots that are considered safe investments, so we are seeing a much-improved market in a number of key areas. The prime market above £400,000 has also seen a 15% reduction in the number of such properties sitting on the market. Perceived value for money, the ‘good schools’ effect and the overall quality of life on offer here is now attracting more buyers from outside Scotland which is very encouraging. We anticipate that these improvements will filter out to the market as a whole and that we will be looking at a brighter picture overall.”
Faisal Choudhry, director of Savills Scottish research, continued: “Our Aberdeen area residential values five-year forecast reflects recent stability in average prices and improving transactional activity. While exceptional properties and established locations will continue to attract buyers, the increasingly high level of available stock will suppress value growth in the short term. This adjustment will help to generate demand and begin a housing market recovery in Aberdeen, with values expected to grow by 4.5% by 2022.”