Every cloud, it is said, has a silver lining – and that is probably as true of the residential property market as just about anything else in life.
One latest example is the revelation that homes in Aberdeen have become a lot more affordable over the five years to December 2018, according to Bank of Scotland (BoS). During the period, property prices in the Granite City increased, on average, by just 2 per cent, whereas the average for all seven Scottish cities surveyed was 30 per cent. Although BoS stays clear of saying so, this cannot be unconnected to the downturn in the oil industry, on which Aberdeen’s economy is so dependent. In the period, house prices rose from £200,907 to just £203,944.
This makes Aberdeen the most affordable of all the cities, with the exception of Stirling. However, the self-styled gateway to the Highlands provides an interesting contrast; average house prices here are the third-highest of the seven but the city also boasts the highest average salary (£43,703). This gives Stirling-based home-buyers an “affordability ratio” of 4.4 despite prices increasing over the five years from £136,036 to £192,026 whereas the average ratio for the seven Scottish cities is 5.36. This compares with Glasgow, where over the same period the ratio has increased from 4.5 to 5.5. What this basically means is that in Stirling a house costs just under four and a half times average salary while in Glasgow you need five and a half times the average salary (£32,089).
Indeed, Stirling is said to have the best affordability ratio of the 62 United Kingdom cities surveyed by the bank, alongside Londonderry/Derry in Northern Ireland. Ironically, however, the Stirling ratio actually diminished between 2017 and 2018 because while house prices rose, average earnings were said to have decreased by £2,000 per annum.
Perth is the only other Scottish city to have shown an improvement in affordability with the ratio changing from 5.4 to 5.1. The average price here is £184,041.
Unsurprisingly, Edinburgh (where the ratio is over 6.5 times salary) continues to be the least affordable Scottish city, with average wages actually lower than Stirling but prices much, much higher at £266,455. Edinburgh is the only one of the Scottish locations not to make the table of the “20 most affordable UK cities”, although it is somewhat behind Oxford, where the average house price is more than 12 and a half times the average local salary.
What a similar survey will reveal another five years from now is anyone’s guess. Should the economy remain as buoyant as it has been of late (Brexit concerns notwithstanding), the population keeps on growing and people’s aspirations move forward (eg a greater desire for homes with a front and back door and exclusive garden ground) then demand for property (and the land on which to build the required stock) will remain high. All of the Scottish cities surveyed have local green belt issues. This has put the respective councils under pressure not only from environmental activists but also from established residents with concerns about the extra demands more house-building puts on local services (particularly schools) as well as, say the possibility of losing a view of fields and woodland from kitchen windows.
Meanwhile, a PS to the recent article on structural enhancements to Glasgow city centre. The pre-publicity material issued by the council included computer-generated images – and one shows an “improved” Sauchiehall Street in driving rain! Since the introduction of CGI it has become the norm, among commercial property developers, to display images of their proposed schemes for urban Scotland in typically un-Scottish climatic conditions – eg oodles of sunshine and folk doing their shopping or sipping coffee al fresco, dressed in light casual clothing. By providing a touch of reality, such down to earth Glaswegian honesty makes a welcome change.
David Alexander is MD of DJ Alexander