Spotlight - Winter 2018 SPOTLIGHT Aberdeen and North Savills Research East Property Market Residential market outlook Developer survey findings Commercial and Rural update Overview Aberdeen and North East Residential 14% reduction in available Aberdeen area house prices to prime stock above grow by 4% over the next five years £400,000 since 2016 Introduction New build market Angus leads the stimulating overall recovery reflected in improved transactional wider North East Four years on since the oil The recovering new build market is activity in some areas. Whilst just over Whilst the overall number of price crash, the Aberdeen stimulating the second hand market in half of the overall stock has been unsold transactions in the North East locations area residential market has some parts of the city. These include the for a number of years, there are now outside the Aberdeen area slightly undergone a period of severe traditional hotspots of Bieldside, Cults more realistically-priced mainstream dropped during the year ending adjustment. From peak to and Milltimber, where a 34% annual properties being launched. September 2018, Angus bucked the trend, trough, the annual number of increase in new build transactions Properties offered to the market in good witnessing a 3% increase. Meanwhile, residential transactions fell supported a 4% increase in second condition and correctly priced continue prices, particularly in Dundee and Moray, by 31% and the average hand transactions. The Cove Bay area to attract strong interest. However, the continue to grow, supported by more house price in Aberdeen City in the south of the city, where new market remains challenging for remote higher value activity. dropped by 20%. build transactions almost doubled, also houses in poor condition. For these The market in Angus has grown mainly There are signs of cautious witnessed a modest recovery in second properties, significant price adjustments up to £500,000 with improved second optimism. An increase in the hand activity. or upgrading will be a necessity. hand activity in Brechin and around the price of oil has supported a In Aberdeenshire, the strongest growth periphery of Dundee, and also more new stable residential market for in transactions last year took place in Outlook for prices build activity in Arbroath. much of 2018. With hopes of The market is locations that are within easy reach of High stock levels have impacted house Transactional activity in Dundee moderate economic growth Aberdeen, particularly those with train price performance in the Aberdeen area. City fell annually by 2% over the last over the next few years, the ripe for recovery connections and amenities. These include However, prices are beginning to find 12 months, mainly due to constrained market is ripe for recovery. Alford, Inverurie and the Kincardineshire their level, with the monthly average in supply below £300,000. Above this Aberdeen faces a huge There is more optimism as property prices hotspot of Stonehaven. Aberdeen City and Aberdeenshire staying level, transactions increased from 103 challenge to diversify its and transaction numbers continue to stabilise around the £160,000 and £190,000 level during the year ending September 2017 economy and reduce its Stock levels beginning respectively for most of 2018, according to 122 during the year ending September reliance on the oil and gas The Aberdeen area was not immune from the While the overall market remains challenging, to peak to the UK House Price Index. But prices 2018, which led to a 3% annual increase sector. But there are already effects of the extreme weather across Scotland some sections are seeing more activity. Second The high level of available stock remains are currently around 4% lower than 2017. in average prices over the same period. signs of more activity in the earlier this year. There was an 11% drop in hand transactions above £500,000 in Aberdeen a key barrier to Aberdeen’s long term Therefore, an expected overall annual A similar trend was witnessed local development market, transactions, from 3,819 during the first six City during the year ending September 2018 were market recovery. The number increased by drop of 4.5% in Aberdeen area prices at the in Moray, where transactional activity with Aberdeen City Council months of 2017 when market recovery commenced, on a par with the number during the year ending 12%, from 5,016 in November 2017 to 5,627 end of 2018 should not come as a surprise. fell annually by 7%, due to constrained implementing the majority of compared to 3,400 during the same period in 2018. September 2017. in November 2018. But the number has We expect price drops easing in 2019, mainstream supply. Above £300,000, our recommendations in the However, activity has picked up again in the In Aberdeenshire, the second hand market slightly dropped since July this year, when subject to a further reduction in stock transactions increased from 72 during Savills City Living report. second half of 2018 and average prices have between £300,000 and £500,000 and also above 5,674 were available. With the exception of levels. This will enable a recovery from the year ending September 2017 to 90 Moreover, Aberdeen’s remained stable in recent months. Despite the £700,000 witnessed a modest recovery over the the market up to £100,000, all other bands 2020. Prices will follow a similar trend to during the year ending September 2018, commercial property market stability, the overall market will remain fragile same period. Transactional activity across all price have seen stock levels beginning to ease. the rest of Scotland from 2020 onwards, which led to a 4% annual increase in continues its road to until we see a sustained period of stable transaction bands in Aberdeen City’s new build market also Supply is less saturated above with 4% growth over the five-year period average prices over the same period. recovery, with the supply of and pricing levels. improved, supported by incentives. £400,000 in particular, and this is being between 2019 and 2023. high quality accommodation remaining constrained. Residential values annual change forecasts Annual number of residential transactions (year to September) Aberdeen should take We expect price drops in Aberdeen easing in 2019, subject to a further The market is buoyant in traditional hotspots and locations that are heart from the fact that the reduction in stock levels within easy reach of Aberdeen rest of Scotland’s residential 5-year 2019 2020 2021 2022 2023 compound 350 market is enjoying its growth ■ 2017 ■ 2018 strongest conditions in a 306 300 decade. Now is the time for 283 14.8% 270 262 UK mainstream 1.5% 4.0% 3.0% 2.5% 3.0% 256 Aberdeen to catch up and 250 238 shine again. Scotland 195 18.2% 200 184 mainstream 2.5% 5.0% 3.5% 2.5% 3.5% 150 Aberdeen area 4.0% 107 mainstream -1.0% 2.5% 1.5% 0.0% 1.0% 100 93 Source Savills Research Simpson Buglass 50 Head of Aberdeen Office transactions Number of residential 0 01224 971 133 Properties offered to the market in good condition Inverurie Stonehaven Cove Bay Bieldside, Cults Alford [email protected] and correctly priced continue to attract strong interest and Milltimber Source Savills Research 2 3 The Rest of Scotland Aberdeen Residential Development Survey At 6.5%, annual prime value growth in Edinburgh was the highest in the UK during 2018Q3 Room for further growth Sentiment is everything Short supply in popular, well-connected neighbourhoods Following a period of inactivity within the Aberdeen Housing Market Area, is driving up prices is sentiment within the development sector improving? Across Scotland, transactional growth is catching up with the other prime Country locations Savills prepared an anonymous survey Looking forward over the next six Part Exchange and Help to Buy being in the higher price bands continues to lift University cities around the UK. Scotland’s country locations, including to gauge the level of market appetite and months, 64% of our audience are of the the three most prevalent incentives. prices, with the average reaching £177,519 Market strength from Edinburgh the Heartland, the Highlands, Borders, gain a better understanding of the key opinion that the market will remain cool Despite this, purchasers are still during the year ending September 2018; continues to spread out to the Argyll and Dumfries & Galloway are challenges affecting house building in while 20% think the market is going to motivated by the location and an annual increase of 4%, compared to surrounding Lothians, where prime performing well despite the political the local market. Our survey attracted get warmer. Interestingly, those active specification rather than incentives the year ending September 2017. transactions above £400,000 increased uncertainty surrounding Brexit. The answers from niche developers to in the market were more optimistic than on offer. Positively, sites are attracting The prime market above £400,000 annually by 25% during the year ending oversupply of houses has reduced and large housebuilders including those those not. a range of purchasers including first led transactional activity, with the number September 2018. there is now a shortage in sought after currently active in the market and those Of those actively developing in the area time buyers, families and downsizers. growing by 8%, from 4,696 during the towns and villages. expressing an interest. and those considering it, uncertainty, year ending September 2017 to 5,070 Greater Glasgow The market below £1 million has