Economy

The Aberdeen economy and its housing markets are inextricably linked to the vagaries of the UK oil and gas sector. While current falling oil prices may begin to have an impact on the local economy in the short term, UK consumer confidence is at its highest level since 2007.

Latest data indicates GDP is expected to rise by a further 2.7% next year, coupled with falling unemployment. The Consumer Prices Index grew annually by 1.2% in September 2014, and is expected to remain low next year. Falls in fuel and food costs helped the inflation slowdown. This should delay any possible rise in interest rates, with the first increase expected by the end of next year, subject to economic conditions. However, worries over UK politics have overtaken economic concerns, according to a Deloitte survey. Although economic growth could be softened by rising geopolitical and global market uncertainty, risk appetite among the chief financial officers of the UK’s largest companies is currently at a seven year high.

Values forecast

The new LBTT rates are likely to impact on prime residential values across Scotland resulting in a flat market until 2016, by which time the market is expected to adjust to the tax regime. Despite the additional tax, the value gap between Prime Scotland and other parts of Britain will remain.

The possible introduction of a mansion tax under a Labour government, would be confined to properties over £2 million, and as such would have the greatest impact in prime London.

We are forecasting annual growth of 3.5% in Scottish mainstream values by the end of 2015, the strongest level across the UK, given the favourable impact of LBTT north of the border for purchases below £325,000. Anticipated rises in mortgage rates could limit capacity for strong price growth. This is likely to keep exposure to risky mortgage debt under control.

We anticipate prime residential markets in the core locations of Edinburgh, the West End of Glasgow and the Aberdeen area will deal with the impact of LBTT better that other parts of the country, with values expected to outperform those for Scotland as a whole over the next five years.

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Taken from:
Spotlight: Aberdeen Area Residential Market