Local estate agents have warned that unless mortgage borrowing costs are reduced then the value of house prices will continue to fall as the north-east property market experiences a slowdown.
Reacting to recent figures which show that the average price for a property in Scotland has fallen for the second month in a row, Robert Davidson, a partner and property solicitor in the Aberdeen-based firm Peterkins, says that the economic turmoil sparked by former Chancellor Kwasi Kwarteng’s controversial mini-budget has had a direct impact on the local property market.
“New enquiries from clients looking to sell and purchase have dropped in recent weeks,” says Robert.
Increased mortgage rates has caused people to delay moving
“Combined with the cost of living crisis, the increase in mortgage rates has resulted in potential sellers and purchasers putting off their move for the moment.
“It’s too early to say by how much prices may fall further but unless borrowing costs are reduced then it’s likely we’ll see increased pressure on prices.”
He added: “It’s frustrating for the market locally because there was still a good level of demand for property prior to the mini-budget.
“Once mortgage rates and prices reach the right levels we would hope to see increased activity across the market again.”
Figures released by the chartered surveyors Walker Fraser Steele show that Aberdeen City was one of only three local authority areas in Scotland to see the average property price fall over the past year by –3.8%.
Property price fall
The value of detached homes in the region had the largest fall from £400,000 in September last year to £355,000 in September this year while between August and September this year the average price fell from £196,590 to £188,581.
The recent drop in prices would tie in with what we are seeing on the ground,” says Robert.
“The small monthly drops in August and September were probably a result of the market settling down after what had been an extremely busy period since the lifting of the initial Covid lockdown back in June 2020.”
Less demand for flats
According to Robert, demand and prices for flats in the city has dropped.
“During this time we’ve seen two distinct markets for houses and flats in Aberdeen and Aberdeenshire,” says Robert.
“An increase in demand and lack of supply of houses has seen prices increase while at the same time an over-supply and lack of demand for flats has seen prices for these drop.”
Between August and September this year, the average property price in Aberdeenshire fell from £234,337 to £232,143 while in Moray prices fell from £206,119 to £202,939 during the same period.
It was a similar picture in the Shetland Islands which saw property prices drop from £199,070 in August to £185,507 in September.
Highland slowdown
And although property prices didn’t decrease in the Highlands – from £229,108 in August to £229,665 in September – Mark Gollan, a Black Isle-based estate agent for Yopa says there has been a slowdown.
“The last 15 sales we have had sold for 6.40% over asking on average – in the summer months we were 11% plus with a best of 26% over,” says Mark.
“This shows a slowdown in demand.
“Also currently, the average time to sell is 53 days – it was as low as 11 days in the summer.”
Demand for properties in the Highlands is also outstripping supply.
“Demand on rural properties is still high – anything that is a mortgage-based purchase is having the biggest slowdown,” says Mark.
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