Local heroes emerging

Despite property prices struggling to find their level, activity in the housing market of the Aberdeen area provides early signs of recovery in some locations. The combined annual number of transactions across both Aberdeen and wider Aberdeenshire has now held firm at just under 8,000 for nearly three years. A stabilising local economy has helped buyer confidence. By the end of this year, overall economic output is expected to increase for the first time since 2014.

Commuter areas outperform

Areas within easy reach of the city lifted Aberdeenshire transactions annually by 6%. Top performers include Insch and Portlethen. The AB51 postcode district, which includes the expanding commuter towns of Inverurie, Kintore and Oldmeldrum, remains the most active residential market in Aberdeenshire. A total of 696 transactions were recorded over the last year, representing a 19% annual increase.

Whilst Aberdeen City transactions fell slightly, a number of areas outperformed, including Peterculter, where the new bypass road can be easily accessed at the Deeside junction. Westhill, at the edge of Aberdeen City, has also benefitted from its proximity to the bypass. With a 27% annual rise in transactions, Westhill now has a strong second hand market following the completion of a number of new build developments that have historically driven the local market. A strong second hand market also lifted activity in the central AB10 postcode.

New build support

The Aberdeen area market is also being supported by major new build residential developments in Chapelton near Stonehaven and also in the popular town of Ellon in the north. Meanwhile, new build activity continues to support neighbourhoods in the north, including Bridge of Don, Grandhome and Bucksburn.

Prime activity expands

Aberdeen’s recovery has also extended to its prime market above £400,000, which recorded a 6% increase in the number of transactions during the 12 months ending August 2019. The AB15 postcode district, which includes the West End and suburbs of Cults and Bieldside, is the most popular prime market across the Aberdeen area, making up almost 30% of activity. However, traditional hotspots that previously witnessed significant levels of activity prior to the downturn are now recovering. These include Milltimber near Cults and further afield in the attractive Deeside village of Aboyne, at the edge of the Cairngorms National Park.

Aberdeen has witnessed its strongest million pound market in three years, recording 11 transactions in the 12 months ending August 2019. More than half took place in the AB15 postcode.

Demand remains strong

A 31% annual rise this year in the number of buyers registering with Savills in the North East indicates that demand for the Aberdeen area’s prime housing stock is continuing to recover. Along with a 20% increase in viewings, signs show that activity in the prime market will continue to recover, provided sellers maintain realistic price expectations.

Outlook for prices

Transactional recovery has occurred even though house prices fell annually by an average of 3.5% across the city and the surrounding county to £146,141 and £189,784 respectively during August 2019. This is mainly due to the chronically high number of available properties, largely priced below £200,000. Despite more realistically-priced properties being launched, this trend looks set to continue as there are currently over 5,500 properties available to buy across the market as a whole compared to 2,500 before the downturn.

An expected overall annual drop of 2.5% in Aberdeen area prices at the end of 2019 should not come as a surprise. We expect price drops to ease in 2020, but only if stock levels begin to reduce. This might enable a recovery from 2021, with 3.5% growth over the five-year period between 2020 and 2024.

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