Residential development

Limited new housing, in tandem with strong employment and population growth, has led to an imbalance between supply and demand across Aberdeen City and surrounding areas. This has resulted in a 12% annual increase in development land values in Aberdeen, which compares to an average increase of 6% across Edinburgh, Glasgow, Stirling and Perth. Restricted development across Aberdeen has fuelled new build prices, especially in the most undersupplied markets.

At an average of £276 per square foot/£2,970 per square metre, prices for new build properties are some of the highest in Scotland (see Table 2). Strong demand should support the high levels of development predicted to come forward in Kingswells, Countesswells, Milltimber, Bucksburn, Grandholme, Dubford, Cove and Elsick.

Rental market

According to the 2011 Census, 15% of households in Aberdeen City were living in private rented accommodation compared to 8% in 2001. However, the imbalance between supply and demand has led to the city having some of the highest rental prices across Scotland. The average rental price per calendar month across the city during the third quarter of 2013 was £1,002 (see Graph 2). This was 11% higher than the figure in 2012 over the same period and 46% higher than the current average of £687 for Scotland. The average rental price per calendar month in Edinburgh City and Glasgow City during the third quarter of 2013 was £820 and £618 respectively. Demand is such that properties in Aberdeen City are taking on average just 13 days to rent, compared to an average of 35 days across Scotland as a whole.

OUTLOOK

The market in 2014

■ Aberdeen’s position as a global energy hub and the current imbalance between supply and demand will continue to underpin the residential market over the next five years.

■ House price growth in the Aberdeen area is expected to exceed the Scottish average over the next five years with prime, mainstream and rental values growing by 2.5%, 4.5% and 6.0% respectively during 2014 (see Table 3).

■ Levels of residential development are anticipated to increase as the Aberdeen area continues to prosper as a centre of high employment and population growth.

Taken from
Spotlight: Aberdeen Area Residential Market