huge slowdown in north-east
Housing bubble could be on brink of bursting
Published:
There was fresh evidence last night that the north-east housing bubble could be about to burst as new figures pointed to a huge slowdown in the market.
The Press and Journal can reveal that the number of properties for sale across the north-east has almost doubled over the last year, from 1,559 on June 15, 2007, to 2,933 yesterday.
And over the same period, the number of properties available at a fixed price has more than quadrupled, from 154 last year to 726.
The figures were calculated using the Aberdeen Solicitors Property Centre (ASPC) listings for houses and flats across the whole north-east – and prompted warnings last night that prices could be about to tumble.
Aberdeen University sociologist John Bone said the north-east housing market appears to be on the brink of a downturn following the global credit crunch and tighter mortgage lending.
He suggested reports that the region can avoid similar problems to England were “well wide of the mark”.
“These figures clearly suggest a slowing market and, potentially, a situation where sellers are holding out for last year’s prices while buyers are now unwilling or unable to meet them,” he said.
“This represents a classic ‘stand-off’ in markets that have peaked before some sellers, eventually, have to give in and accept what is on offer.
“Also, given that a good deal of the housing bubble has been driven by investors, at this point many are likely to sell out to protect their capital gains, driving the market lower still.”
There is further evidence to suggest that the housing market in the north-east has reached a “tipping point”.
According to ASPC figures, average house prices in the Aberdeen area for the first quarter of 2008 at £202,661, were 2% up on the previous quarter – but were almost 4% down on the second quarter of last year (£210,356).
“All of these factors taken together suggest that the market peaked at the middle of last year and has been treading water since,” added Mr Bone.
“While the next quarter’s figures may provide a clearer indication of what’s happening in Aberdeen, there are very sound reasons for assuming that the Scottish and Aberdeen market is merely lagging behind the UK and that the trend is now likely to move downward in line with the rest of the country.”
John MacRae, chairman of the ASPC, agreed the figures showed a downturn “to an extent”, but did offer some hope to homeowners.
He said the credit crunch is forcing owners to sell their homes before they buy, and as a result more properties are on the market.
“For the past three years, people were buying property before they sold their current home because homes were being snapped up so fast.
“But that has changed and people don’t want to end up with two houses, so they are selling first.”
However, Mr MacRae said prices were still holding up in the north-east.
Sales appear to be tougher for developers, who are now offering cashback incentives on new homes.
