New figures show house prices have risen strongly in almost every area of Scotland since the pandemic – but not Aberdeen.
The new analysis by property firm DJ Alexander shows the average home in Scotland has risen in value by 27% since March 2020.
But the Aberdeen statistics tell a different story.
In March 2020, the average sale price in the Granite City was £141,192 and this has since seen a 2.2% fall to £138,110.
Why are Aberdeen house prices falling behind?
David Alexander, chief executive of DJ Alexander, said the reason for the lower prices is all about supply and demand.
As a direct result of the fluctuating fortunes of the oil and gas industry, there has been an “oversupply” of homes in the city.
He said: “Prices in Aberdeen have remained subdued because of the sheer volume of properties available.
“This month alone there are over 2,500 properties on the market in Aberdeen which is the same as Glasgow and more than Edinburgh.
“With so many properties available and an average time on the market of 423 days it has been difficult for momentum to build and prices to rise.”
Is city’s property market turning a corner?
However, Mr Alexander said there might be a brighter future for homeowners.
He said a renewed focus on oil and gas exploration could be a catalyst for more demand.
He adds: “There has, for a long time, been an oversupply in the market due to uncertainty over the oil and gas sector.
“But this may be about to change with the recent announcement of an expansion of exploration and the potential for many more people to come to work in Aberdeen in the future.
“If the opening up of new fields results in an increase in the workforce, then we will see prices rise in the future.”
House price boom in other Scottish cities
The collapse in Aberdeen’s prices compared to the rest of Scotland is even more stark when taken over a longer period.
At the end of 2016, the city’s average house price was £167,654 – 21% ahead of the Scottish average of £138,206.
Less than seven years later, they are now 28% behind the Scottish average.
Since March 2020, Glasgow has had the greatest increase of any Scottish city with average prices rising by 33.5% while Edinburgh and Dundee are both up 21.4%. The highest gain has been in East Lothian, with prices up 59.7%.
Mr Alexander adds: “These figures show that, despite media concerns that house price increases have slowed in recent months this is actually because they have risen at such an enormous rate since the start of the pandemic.
“Even without higher interest rates there would have to be a slowing of house prices simply because they have been rising at an unusually high pace.
“It is unlikely that these increases can continue in the long term because there must come a point at which affordability issues kick in.
“There will be a stabilising of prices and a return to lower annual increases, but we may not be at that point just yet and some parts of Scotland remain extremely popular.”
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