Key themes mentioned in the research report are as follows:

  • Property prices in the Aberdeen area are now 25% above the ten year average
  • While residential sales in Aberdeen increased by only 4% annually, due to diminishing supply in the city, there was a corresponding 20% rise in sales in neighbouring Aberdeenshire
  • Million pound plus sales in the Aberdeen area reached a record high in the year ending September 2014

Fiona Gormley, who joined Savills as Head of Residential at the firm's new Aberdeen office earlier this month, said: 

 "House price growth here is expected to exceed the Scottish average over the next five years. However Aberdeen's position as a global energy hub, the current imbalance between supply and demand, and the impact of the new LBTT tax on prime property will determine the market in the medium term.

"The announcement of the proposed Land and Buildings Transaction Tax (LBTT) rates in recent weeks is motivating both buyers and sellers and we are  anticipating a busy first quarter in 2015 for the housing market in Aberdeen and beyond."

Faisal Choudhry Savills Head of Research in Scotland said: 

"There has been further strong evidence of a steady recovery in Scotland's residential market, with Aberdeenshire leading the way.  This is apparent in the 20% annual increase in Scottish million pound sales, and a rise in buyer interest  cross the Aberdeen area prime market since the Referendum.

"However, a lack of prime stock to meet demand in city hotspots is slowing the rate of sales growth but keeping prices strong. Aberdeen City has been particularly affected by this constrained supply."

Prime activity in the West End, Bieldside, Cults, Milltimber and Peterculter made up over a third of prime transactions across the Aberdeen area during the year ending September 2014, representing 241 sales. Demand has far outstripped supply in such hotspots, restricting the increase in prime sales across the city.

Meanwhile, prime transactions in the Aberdeenshire and Kincardineshire county area almost doubled in the same period, reaching 325 sales. This represents a remarkable recovery compared to the previous 12 months when there was only a 2% annual rise in prime sales. This phenomenon has been driven by the satellite hotspots of Inverurie, Aboyne, Banchory, Westhill and Ellon.

Million pound market

There was a 20% increase in transactions above £1 million in Scotland, with 148 sales recorded  during the year ending September 2014.  This is now only 7% behind the 10 year annual average.

Edinburgh, the traditional hub of the million pound market with a 48% share, saw a slight rise at the top end, representing 71 transactions. Such sales in the Aberdeen area reached a record high of 30 transactions, up 30% from 23 during the previous 12 month period. This included 11 new build sales, with six taking place at a single development/ in the West End of the city.

Forecast

The Aberdeen housing markets is inextricably linked to the vagaries of the UK oil and gas sector. Falling oil prices may begin to impact on the local economy in the short term, however UK consumer confidence is at its highest level since 2007.

The new LBTT rates are likely to impact on prime residential values across Scotland resulting in a flat market until 2016, by which time the market is expected to adjust to the tax regime.

Savills anticipates prime residential markets in the core locations of Edinburgh, the West End of Glasgow and the Aberdeen area will deal with the impact of LBTT better that other parts of the country, with values expected to outperform those for Scotland as a whole over the next five years.

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