Oil industry helps Aberdeen house prices bear up in declining market

Recent rate rises have sparked fears of higher repossessions. Picture: Getty
Recent rate rises have sparked fears of higher repossessions. Picture: Getty
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A PROSPEROUS economy built around the oil business has helped make Aberdeenshire one of the most resilient property markets in the UK, according to new figures.

The market in the Highlands, Perth and Kinross and Aberdeenshire were the three top ranked areas in Scotland in a survey comparing property prices in June 2007 with last year.

Whereas the average cost in some parts of the UK has fallen by as much as 53 per cent, the average price of homes in Aberdeenshire has fallen by just 7 per cent since the property boom was in full swing.

Aberdeenshire was the only area ranked in the top 20 performers. The figures, released by the Bank of Scotland, show the average house price in the area was £212,694 in 2007, compared to 197,918 in 2011.

The Highlands also performed relatively well with a drop of 9 per cent in the average price of a house, while in Perth, Aberdeen and Edinburgh prices dropped by an average of 11 per cent.

The average price of a home across Scotland fell from an average of £173,914 in 2007 to £139,699 in 2011, a decrease of 20 per cent.

Scotland fared better than the UK as a whole, where the average price of a home fell from £228,251 in 2007 to £172,427 in 2011 – a drop of 24 per cent.

Martin Ellis, housing economist at Bank of Scotland, said: “Scotland, like the rest of the UK, has been hit hard by the economic downturn of the last few years. There is no area in Scotland where house prices are currently higher than they were at the peak of the boom in 2007 although a number of places, including Aberdeenshire and Highland, have weathered the storm relatively well.

“A striking feature of our analysis of the areas that have fared best and worst in the past four years is a distinct north-south divide. Those areas that have performed are nearly all in the south of England whereas those areas worst affected are all outside southern England.”

The new figures show prices in Rochford, South Lakeland and Islington are almost at 2007 levels, with prices 1 per cent higher in Rochford and only 1 per cent down in Islington.

East Ayrshire and Inverclyde were among the 20 worst performers. Average house prices in both areas have dropped by 29 per cent since 2007.

However, the greatest drop in average prices was in Northern Ireland, where the average price of a house fell by between 53 per cent in Craigavon to 43 per cent in Derry City. All nine areas with the highest fall in prices were in Northern Ireland.

John MacRae, chairman of the Aberdeen Solicitors Property Centre, said he was not surprised by the figures for Scotland.

He said: “The reason Aberdeen does so well is the reason Aberdeen does well in most economic indicators – oil.”

He said the prosperity and low unemployment enjoyed by Aberdeen, a healthy buy-to-let market and a stream of people coming to work in the energy business had helped the area weather the storm.

“The peak was in June 2000. Scotland was affected by the banking crisis in late 2007 and we are still feeling the consequences of that. Edinburgh and Glasgow are still below what they used to be in terms of volume and sales but Aberdeen has almost got back to where it was.”

However, Simon Rettie, managing director of estate agents Rettie & Co, said: “Although Halifax/Bank of Scotland and other banking indices have their place in the housing market, they are only sample based and sometimes can be misleading.

“They also exclude cash purchases, which now make up a considerable proportion of the market.”