Now is the best time to buy property in Aberdeen for 20 years, according to new research.
Aberdein Considine says buyers and investors from other parts of the UK are returning to the north-east market as the energy industry emerges from one of the most testing downturns in its history.
Robert Fraser, senior property partner at the law firm, believes the current market is the best property buyers have experienced in two decades – saying that people can now get a two-bed flat for the same price as a one-bed in 2014.
He said: “It’s really taking a pragmatic approach and looking historically at what the correlation is with oil and gas in the north-east and matching up that with the property prices over the same period.
“You can see how closely the property prices follow the local economy rather than the national economy.
“Since the oil price crash of 2014-15, when the Brent Crude benchmark dropped to under $30, we have seen a gradual decline in average sales in both Aberdeen and Aberdeenshire.
“So far this year, the average sale price in Aberdeen alone is £179,485, down around 15% on the 2014 peak.
“However, with oil now sitting above $80 again – and suggestions that global events could push it higher – savvy buyers and investors are returning to the market in Aberdeen.”
The law firm believes first-time buyers should take advantage of lower prices amid warnings that a new skills shortage in the industry could trigger a similar worker influx to the one which almost doubled average property values in the late 1980s and 1990s.
Mr Fraser says the city is more likely to see a “sustained growth” going forward rather than a property “boom”, adding that the firm is already seeing a return to the market of some long-term investors and landlords, including those from overseas.
He said: “It’s safe to say on a local level we are through the worst of the recession and we are now seeing the recovery of the oil price and historically that has shown to lead to an increase in house prices.”
The UK Government’s Oil and Gas Authority said in its most recent report that the cost-cutting which has seen thousands of jobs lost in the sector “may now be over”.
North Sea operators are also expected to generate a £10 billion cash surplus this year – the highest figure achieved since 2010 when the industry was enjoying a boom.
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At the 2014 market peak, there were around 3,000 properties on the market at any time within the city.
That number sits at more than 6,000 today, with a particular oversupply of city centre flats.
This has created a buyers’ market where properties are changing hands for below home report value in many cases, according to the law firm.
Mr Fraser added the situation has occurred down to “supply and demand”.
He said: “At the moment we have huge supply with what has been a more limited demand but gradually that will rebalance.
“It may possibly get to a stage full circle again back to what we are used to in Aberdeen with over-demand and less properties.
“These conditions are rare in the north-east – I haven’t seen a market like it since 1998 after the last real oil dip – and if history is to be repeated, then people buying at the moment are likely to see a substantial return on investment over the next five to 10 years.”