North East Property Prices Rising
By Dave Geddie, Property Partner
House prices in the north-east are rising by nearly £1,000 a month despite falls in the rest of the UK.
Latest official figures released by the Registers of Scotland (ROS), where all sales must be registered, show that the average cost of a home in Aberdeen has jumped £11,374 in the past year – a rate of £947 a month.
Property values in Aberdeenshire have also continued to rise, at a rate of almost £600 a month, adding £5,500 to the average home in places such as Gordon, Kincardine and Deeside, and Banff and Buchan.
The number of houses being sold in both areas has also increased by about 10% – but nationally it is a different picture. House prices fell by 0.1% in November, Halifax said, and prices in the three months to November, at £164,708, were 0.7% lower than a year earlier, which was their first annual decline since November 2009.
David Geddie, a senior residential partner at Aberdeen-based solicitors Simpson and Marwick, said 2011 could see prices rise further in the north-east, regardless of what happens elsewhere.
He said: “With oil at $90 a barrel, I have high hopes that the market here will be much better than the rest of the UK next year, because we have a micro-economy with the energy industry.”
However, Mr Geddie said that tougher lending rules from banks since the credit crunch continue to affect first-time buyers and the buy-to-let market, hitting the sale of flats.
He added: “It is very positive news for Aberdeen and Aberdeenshire that prices are rising, but we recognise that the area of the market not seeing growth is the first-time buyers market.
“Mortgage lenders are still asking for huge deposits – which means people are having to put off buying or rely on the so-called bank of mum and dad.
“In the buy-to-let market, the mortgage products are much more severe – before buyers needed to find 5% but now that can be as much as 25%.”
Bob Collier, chief executive of the Aberdeen and Grampian Chamber of Commerce, also has concerns.
He said: “House price gains in the north-east are more likely to be due to supply constraints than a healthy house market.
“Housebuilders are currently laying off staff or working shorter hours, exacerbated by the poor weather.
“First-time buyers now have to have a large deposit to get on the housing ladder, and the bank of mum and dad has become more important than the building societies.
“In the longer term, the local development plans for both the city and shire allow more scope to build houses over the next five-10 years and supply constraints should ease in the long run. In the meantime house prices in premium areas will hold or build their value.”
Howard Archer, chief economist at IHS Global Insight, said house prices would be kept under pressure by “a poor combination of factors for house prices”, including public-sector job cuts, low consumer confidence following spending cuts, difficulties in getting a mortgage and low wage inflation.
But a report from the National Association of Estate Agents (NAEA) suggests that, nationally, demand for property increased for the first time in four months during November.
The average estate agency branch had 241 house-hunters on its books during the month, up from 218 in October.
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