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Oil and gas uncertainty weighs on north-east house prices

© Supplied by DCT MediaAGCC survey energy

House prices in Aberdeen and Aberdeenshire have experienced the lowest level of growth in Scotland as uncertainty over the region’s reliance on the oil and gas industry has weighed on property values, new research shows.

Scottish property prices have increased by more than 20% since the start of the pandemic, while Aberdeen’s rose by only 5.8% and those in Aberdeenshire by 7.9%,  according to analysis of data by property firm DJ Alexander.

Overall property price growth in Scotland outstripped markets in Wales and England as well as the UK average.

Average property prices in Scotland rose by 21.3%, compared with 19.6% for Wales, 16.3% across the whole UK  and 15.6% in England over the same period.

The buoyancy of Scotland’s market is “surprising”, DJ Alexander said, with large price increases in Inverclyde, Argyll and Bute, South Ayrshire and adjacent areas indicating a “shift of people moving to larger properties just outside Glasgow as a result of the pandemics’ working from home policy”.

However, David Alexander, chief executive of DJ Alexander Scotland, said the figures highlighted “quite disparate market performance across different parts of the country” and the north-east was suffering due to “uncertainty over the future of the oil and gas sector”.

Other recent reports have highlighted how Aberdeen’s city centre has also suffered relative to other Scottish cities.

Mr Alexander said: “Glasgow’s property market and the surrounding areas have been booming during the pandemic, with a quite extraordinary average price increase of 23.3%.

“However, Aberdeen and Aberdeenshire show the lowest rises, and this reflects the continued uncertainty, unrelated to Covid, over the future of the oil and gas sector.

“Until this situation is clarified, then house prices are likely to remain flat or with limited growth.”

Edinburgh had the third lowest level of growth, at 15.4%, albeit this was from a “remarkably high base,” Mr Alexander said.

He added: “These figures reveal just how lively the Scottish housing market has been during the pandemic.

“The assumption at the start of the pandemic was that property prices would probably be flat or only rising slightly but they have been, and continue to be, the surprise story of the last 21 months.

“The increases across the country reveal this has been a Scotland-wide phenomenon with some areas really taking off due to a mixture of shifting buying patterns, high demand, and low stock levels.

“You could easily argue the large price increases in Inverclyde, Argyll and Bute, South Ayrshire and other adjacent areas indicates a shift of people moving to larger properties just outside Glasgow as a result of the pandemics’ working from home policy.

“Whether this pattern holds when people start to return to the workplace (as indicated by the first minister this week) will become apparent in the coming months.

“While Edinburgh’s growth may seem modest, since it is near the bottom of the table in percentage terms, this is because it started from a remarkably high base and the gap between the Scottish capital and the rest of the country remains substantial.

“The average property price in Edinburgh is now 73.4% higher than the average for Scotland as a whole.”

He concluded: “While these increases are unlikely to be sustainable in the long term, they are a pleasing sign that we are coming out of the pandemic with a robust property market which has remained strong, despite the tough times we have all been living through.

“What happens in the coming year for property remains unpredictable and will be determined by how well and how quickly the Scottish economy recovers and returns to normal.”

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