New research into Aberdeen’s housing market suggests the prospects for a long-term recovery are good, despite the fact that sellers’ price expectations are currently creating a glut.
Fresh research by Savills shows that the oil-shock in the city has caused home sales to drop by 24% over a two-year period.
The volume of residential property sales across the Aberdeen fell from 11,253 during the year ending September 2014 to 8,577 during the year ending September 2016.
Prime second hand sales - above £400,000 - fell by 51%, from 663 during the year ending September 2014 to 322 during the year ending September 2016, as LBTT charges further suppressed the market for high value homes.
According to the report, the number of properties sold for £1m-plus dropped to just eight during the latest period, from 29 two years ago.
The research also found that house prices had risen by 11% in just one year, between 2013 and 2014 at the peak of the market, but they have since fallen by 7% and a further 8.5% was anticipated by end of 2018, before a gentle recovery would take place, in line with the rest of Scotland.
Faisal Choudhry, Savills’ head of residential research in Scotland, said: “Aberdeen has benefited from the warm glow of the oil market. By the middle of 2014, Aberdeen’s average values increased to just over £200k, which was 48% above the Scottish average. The market is now feeling the chill of the oil market downturn.”
Choudhry warned that the “lack of adjustment in pricing”, coupled with a “continually decreasing number of transactions”, is leading to an ever-growing glut of properties that are currently available to buy in the Aberdeen area.
She added: “Providing house prices adjust in the short term to realign them to buyer expectations, the prospects for the medium to long-term recovery are good.
“The Aberdeen market will continue to be underpinned by high quality housing, top-performing schools and universities, good local amenities, improving infrastructure and an increasingly diversified local economy which is not solely dependent on oil.”