Ever wondered what it is about Aberdeen’s property market that makes it so unique?
Rebecca Buchan navigates 10 years of ups and downs in our in-depth look at prices in the city, from the oil downturn to bursting bubbles and even the unexpected influence of a famous Instagrammer…
For many years the value of property in Aberdeen has outperformed the rest of the country.
The great granite architecture which gives the city its name has always been considered a valuable commodity, with many choosing property purchases as their favoured way of investment.
No need for bonds, stocks or shares. And pensions – who needs one of those when you have three flats you rent out in the centre?
They’ll never lose their value, Aberdeen’s in a bubble after all…
What could go wrong?
The city was an anomaly and weathered the credit crunch with ease while the rest of the country was on its knees.
But five years ago, during the oil and gas downturn, it all came crashing down and prices have since fallen by around 20% on average.
And for those who invested in the city’s tenement flats, it’s far from good news with a massive oversupply and lack of demand.
There are now some positive signs of market recovery and the downward trajectory the market was on has started to creep upwards.
But will prices ever get to where they were at the peak again or do we just need to accept those days are long gone? And why has Aberdeen always had its own unique market?
Exodus of highly-paid workers
Darroch Robertson, partner at surveyors Graham and Sibbald, explained: “Aberdeen came out the credit crunch in blocks, really, because borrowing money didn’t affect people in Aberdeen in the same way it did elsewhere.
“This was probably because it was a relatively affluent economy and oil and gas was going well at that time and fewer people were reliant on 90% mortgages and such like.
“People were able to obtain finance without stretching themselves as well.
“Because of this, Aberdeen came out of it quite quickly while Edinburgh and Glasgow were stuck in the midst of the effects of the credit crunch for quite a long time afterwards.”
Darroch said it was because we were so shielded during the first downturn that the city really felt the effects of the second slump.
He said: “That’s probably while the second slump affected us more because it wasn’t just a financial thing, there were many other issues which came into play there.
“For a start you saw that people who are higher up the food chain losing their jobs and having to move out of Aberdeen.
“You really noticed that out the west corridor – Deeside, Cults all the sought after suburbs were really being affected by people moving out and there was really little demand.
“That’s where you noticed the effects first, there and the flat rental market.”
The curse of the Aberdeen flat market
The market around Aberdeen’s tenement flats really took a beating following the downturn.
At its peak one-bed properties in Rosemount could go for up to £170,000 whereas now most listed on ASPC are being marketed for around £100,000.
“It was affected quite quickly because of the previous reliance on lots of contractors and people working for a week in Aberdeen and travelling in the city and moving out for the weekend,” Darroch said.
“These people were no longer required and lots of part time contractors were losing their jobs which meant the flat rental market all of a sudden went into huge oversupply.
“Then gradually over a period of time the effects of the wider economy affected all of the property market.
“You really noticed that in 2015 the flat market wasn’t affected too much and the council house market wasn’t affected, because the people who are buying these are generally not connected to oil and gas.
“But gradually it ends up affecting everything, and it did and still is.”
Felicity Forbes-Davidson, associate at Graham and Sibbald, started her career in August 2009, after the initial peak in 2007.
She said one of the things people struggle to deal with is the fact that properties can’t possibly be worth less now than they were when purchased 10 years ago.
Check out how prices have changed in our chart –
“People are aware there was a peak and they might think ‘well if we bought then, there might be a problem’ but the market in 2011/12/13 is still above where we are now.
“So they assume because they’ve had it 10 years – how can it possibly be worth less now?
“When we got to 2014 that’s where the real peak was and it did continue to go up.
“What has happened since is really unique to our geographical location.
“We are not currently seeing the same recovery now as we did after the financial crash in 2007/08 because there has been a lot of things that have happened since.”
Find out the average property price in your area with our interactive map
While there are clear signs of market recovery, that’s not being seen across the whole of the market with flats in the city centre still really struggling.
Darroch said: “We just don’t know if that will gradually filter through into the flat market, but I think it will take a long time because it has been so affected.
“You just need to go do a search on ASPC to see how many are available for sale.”
“Previously the lack of supply of these meant that even if your flat was a bit tired and needed a bit of work, it would have sill sold,” Felicity added.
“But now, because there are so many to choose from, you’re going to choose the cracking one.
“We are seeing some quite quick sales in term of good flats, the cream is really rising to the top.”
‘Hinch’ your home for a quick sale
Darroch agreed and referenced one famous Instagram blogger, Mrs Hinch, who people are turning to to help sell their homes.
He said; “One of the selling agents benched a phrase to me I had never heard of. She said ‘it’s been Hinched to within an inch of its life’ and I had no idea what that was.
“But I now know it’s in reference to Mrs Hinch.
“It works because if you go look at two-bed flats in Rosemount, for example, there are very few that have sold – but if you go look at the ones that have sold it will be nice ones.”
Our chart shows how the number of flats sold across the north-east has dwindled
But it looks like not even a good Hinching can help the tenement property market as the buildings typically are becoming more dilapidated, with less work being done to ensure their upkeep.
Darroch said: “There is one sector of the market that I do not know how they can improve it, and that’s the stone tenement market.
“They are gradually becoming in poorer condition because there is a lack of investment there by the owners. People always complain that the council doesn’t help, but it’s nothing to do with the council at all.
“It eventually becomes more costly to refurbish than it does to not do anything with it.”
How transport tastes shape buying habits
Felicity said as the prices of modern flats have come down as well, it is unlikely buyers would buy a tenement that has a roof that needs re-slated and rot repairs that need done when you can buy a modern two-bed with parking that is low maintenance and has a certain wow factor.
She added: “Your young persons’ salary level is high in comparison to some other parts of the country and these tenement flats would traditionally be for your first-time buyers.
“So it’s understandable they would now question why they would take on that flat in Ferryhill and have the potential problems when you can now go into something that’s 15/20 years old and have much fewer problems – and of course you have that parking.
“Aberdeen is still a real car city and living in the tenements it’s a nightmare getting parked.”
City Centre Masterplan will make a difference
With that in mind, the pair believe work still needs to be done by the council and relevant authorities if they want to realise the City Centre Masterplan and get more young professionals living and working in the centre.
“There has to be more joined up thinking about making people want to come into the city centre,” Darroch said.
“We do have some nice little pocket flat developments in the city centre that people have done, but I think the actual city centre is the problem rather than what we have available.
“There have been developments which have taken place and there is huge demand to convert more.
“But the general improvement of Union Street as a whole would be what would entice me back into the city rather than an influx of nice developments, because there are already some nice little developments of newly-converted flats.
“There is a demand for these but it is going to become more of a tough sell as it goes along as there is a finite number of people willing to stay in a development in the city centre, especially when the high street is becoming more and more vacant and there isn’t anywhere to park.
“That’s why the masterplan will be extremely important.”
It has become apparent that extra space and nice outdoor areas are now important to people, which they struggle to get at a reasonable price in Aberdeen city centre.
Felicity said: “We have seen a lot more closing dates recently than we have done in a long time. There is a lot of positivity in the local market and that is what agents will say.
“But the problem really is with the tenement flats and until the oversupply is readdressed it’s never really going to stabilise.”
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