No More Boom and Bust?

FFMWith the general election round the corner,  Forbes McLennan adopts a prime ministerial theme in our review of the Aberdeen Property market.

The Victorian Prime Minister Disraeli is credited with the saying: “Lies, damned lies and statistics” – he’d obviously never heard of the quarterly statistics produced by Aberdeen Solicitors’ Property Centre (ASPC).   These statistics are actually a fair barometer of the housing market in the north-east of Scotland over the past few years.

We now have access to statistics for the whole year of 2009 and have carried out a detailed comparison of these statistics against previous years.

The average house price in the north-east of Scotland in 2005 was £131,685 and this rocketed by 21%  in 2006  to  £159,634 and by 26% to  £202,479 in 2007.  In 2008 there was a small decrease of 0.7% with a further decrease of  2% in 2009 to £197,156.  It is now obvious that 2007 was possibly the boom year to end all.  To use the words of another former Prime Minister (Harold MacMillan) sellers in 2007 “never had it so good”.  Given the financial mayhem since 2007, north-east house prices are holding up  extremely well.  According to a survey of national house prices by  HBOS during 2009 the average property price in Scotland decreased by 10% to £123,398.  Likewise, according to the HBOS survey the average property in the UK decreased by 10% in 2009 to  £162,085.  The average property price in the UK is now slightly less than the 2005 figure.

Market activity has slowed considerably since the boom of 2007.  In that year there were 7,248 sales through ASPC whereas in 2009 there were 4,810 – a decrease of  33%.  The main reason for this was the financial uncertainty through 2008 and 2009 but the introduction of Home Reports in December 2008, which has added considerably to marketing costs, will have played a part.

Another statistic of interest is that at the end of 2006 there were only 455 properties for sale in ASPC.   Quite literally at that time there was almost nothing to buy. Two years later at the end of 2008 this had increased to 2,218.  The latest figures for the last quarter of 2009 show this figure to be a more manageable 1,255.

It is clear that we now have a changed market and the heady days of 2006 and 2007 are well gone.  However, supply is very limited, particularly in the west end, and demand undoubtedly exceeds supply.  Closing dates are becoming normal once again although typically there will be three or four offers, not twelve or thirteen as in the boom days.

We recently marketed and sold a west end house which had over 50 viewers.  This shows the demand for property in the right location is definitely there.

At James & George Collie,  we cannot see the current situation changing in the short or medium term.  Our view is that this is as good a time to sell as there has been since 2007.  It is also a good time to buy as there is less competition than in the boom years.  Unusually, the playing field is level as between sellers and purchasers at the moment.

In 1967 the Labour Prime Minister Harold Wilson talking about devaluation referred  to “the pound in your pocket”.  In 2010, that pound will stretch further than it has for some time in the Aberdeen property market.

The present incumbent of Number 10 Downing Street famously once said there should be “ No return to boom  and  bust”.  The current market is neither of these and this is welcome given the turbulence of the last few years.

The estate agency team at James & George Collie based at 220 Union Street and our property solicitors at 1 East Craibstone Street are always available for an informal discussion, on a no obligation basis, concerning sale or purchase.  Alternatively contact Forbes McLennan – f.mclennan@jgcollie.co.uk

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