House prices in Aberdeen continue to rise at start of 2015
House prices in Aberdeen have continued to rise in the first quarter of 2015, with prices up 0.5 per cent, compared to a 2.9 per cent decrease across Scotland.
Based on data we provided to the Centre for Real Estate Research at the University of Aberdeen, the house price index for Aberdeen found that the annual house price change in Aberdeen City and suburbs is 7.3 per cent. The annual house price change is 7.7 per cent in Scotland and 8.1 per cent in the UK.
As the prices of flats and houses rose, it can be seen that the overall volume of sales decreased to 1,538, a decrease of 16.5 per cent from the previous quarter and down 2.3 per cent compared to Q1 of 2014.
This comes as the RICS predicts that house prices will rise in the coming months as fewer properties come on to the market in Scotland.
The first quarter figures for 2015 were awaited, by me, with some interest. The background to the housing market in the first quarter of 2015 was more complex than usual in that certain novel or unusual features came into play.
The first factor influencing the market was the well-publicised change, in Scotland, from Stamp Duty Land Tax to Land and Buildings Transaction Tax. Much had been made in the public forum, before the changeover, of the adverse effect LBTT would have on the housing market, despite ASPC’s sales figures showing that over 80 per cent of transactions were below the point where LBTT takes more than SDLT. It was noticeable that, in the last six months, a greater number of higher end houses came on the market as people, thinking of moving, sought to beat the deadline.
The second factor coming into play, which is not unknown, is the decrease in the oil price and the effect it would have on the market. As can be seen from the figures, the undoubted concern in the oil industry is not yet reflected in house prices but, there is a small decrease in volume which may indicate how the market is going to go. Because the oil companies and their employees have been here before, there is some expectation that the oil price fluctuation and its consequences will be managed. If that is so, then there is reasonable optimism that the effect of the oil price will not be as manifest as contemplated.
The third factor that has come into play, this year, is the general election - thankfully almost upon us. The indication from the polls is that the result of the election may be too close to forecast, and such uncertainty may affect general confidence in the community until such time as we know how things are going to progress.
For the foregoing reasons, therefore, it is all too easy to imagine our local market becoming depressed but I have some grounds for optimism that this will not happen. The fact is that the market for starter homes is still very active. Mortgages have never been so cheap and there is increasing competition to provide very attractive fixed term rates from the main lenders. Because of those factors it is likely that reasonably priced properties will still find a ready market. I am convinced that there is still demand out there for first time purchases and that this will filter up the market. There will be some effect felt from the uncertainties outlined above but I do not think we should be unduly concerned.