Housing markets

The prime residential market across the Aberdeen area has benefited from the continuing success of the local economy, boosted by the energy sector. Edinburgh remains the traditional hub of the prime residential market in Scotland, accounting for 33% of second hand transactions at £400,000 and above, according to Savills Research. However, this is closely followed by the Aberdeen area, which accounted for 21% of prime activity over the last year. Whilst the number of prime transactions in the capital over the past year has remained stable, prime activity in the Aberdeen area increased by 13% year-on-year, compared to 6% across Scotland as whole (see Table 1).

The vast majority of prime property purchasers in the Aberdeen area originate from the local vicinity. However, buyers from outside Scotland made up 9% of prime transactions in the Aberdeen area during 2012 and 2013, compared to just 3% from other parts of Scotland. The strength of the energy sector is apparent in the origins of overseas buyers, many of whom came from locations such as Scandinavia, the Middle East, Australasia and the United States.

There is strong evidence of market strength spilling out to regional and Central Belt locations. Prime transactions in Tayside increased this year, fuelled by the strong market in the Aberdeen area. Furthermore, the number of buyers living in the Aberdeen area, registering with Savills to purchase in other parts of the UK, has increased by 76% this year.

Mainstream residential transactions in the Aberdeen City and Aberdeenshire Local Authority areas are 13% higher year-on-year, compared to 10% for Scotland as a whole. Continuing confidence and the strong economy are reflected in the Time on Market statistics for Aberdeen City. Properties marketed by all agents in Aberdeen City currently take on average 18 weeks to sell compared to 26 weeks across Scotland’s other cities. Residential transactions across the Aberdeen City and Aberdeenshire Local Authority areas are currently only 9% lower than the 10-year average compared to -25% for Scotland as a whole. These areas are leading the current housing market recovery, alongside other core locations in Scotland’s Central Belt.

Whilst the current average transaction price for Scotland (£155,304) has remained unchanged from last year, the average price in the combined Aberdeen City and Aberdeenshire Local Authority areas (£203,534) has grown by 5% and is now among the highest in Scotland (see Map 1). The current average transaction price in this combined area is 24% higher than its 10-year average, whereas average prices across Scotland and Edinburgh are 9% and 8% higher respectively.

According to a Bank of Scotland survey (April 2013), Aberdeenshire offers the best quality of life of any rural area in Scotland. The Aberdeen area attracts a wide range of buyers including those relocating for employment in the energy markets, access to top quality educational facilities or a change of lifestyle. This is evident in population changes in the past decade. There was an 8% increase in the population in these Local Authority areas between 2001 and 2011, compared to 4.6% for Scotland as a whole. The population increase in the Aberdeenshire Local Authority area alone was 11.5%, which was the highest in Scotland.

Million pound market

Suppressed by stamp duty thresholds and a lack of home-grown buyers, the top end of the market at £1 million and above in Scotland remains difficult, with increasing reliance on purchasers from outside Scotland. However, there are signs of stability in this price band with 122 transactions recorded in each of the two previous 12-month periods. This is 18% less than the annual average over the last 10 years leading up to the end of September 2013 (see Graph 1).

Whilst Edinburgh has a 47% share of the market at £1 million and above, the Aberdeen area remains in second position with a 19% share of this market over the last four quarters. The total number of sales at £1 million and above across Scotland in the last five years has fallen by 22%. In the same period, the total number of sales in the Aberdeen area has jumped from 44 to 87, a rise of 98%.

The majority of activity in the Aberdeen area at £1 million and above over the past ten years has taken place in the AB13 and AB15 postcode districts covering the West End, Bieldside, Cults and Milltimber areas, accounting for 63% of transactions (see Map 2).

Taken from
Spotlight: Aberdeen Area Residential Market