Aberdeen bucks trend on back of black gold

PUBLISHED : Wednesday, 30 July, 2008, 12:00am
UPDATED : Wednesday, 30 July, 2008, 12:00am

Every cloud has a silver lining. Until last week's turnabout, the rising price of oil was exacerbating the effects of the credit crisis on most of Britain's property market because rising fuel costs left homebuyers with less cash to spend.

But until recently, in one corner of northeast Scotland, those runaway prices had been fuelling a house price boom. In the port city of Aberdeen and its surrounding countryside the housing market has been buoyant as the operational centre of Britain's North Sea oil industry profited from record prices being paid for its black gold.

According to figures by housing intelligence firm Hometrack, prices in Aberdeen rose 18 per cent in the 12 months to May this year, pushing up the average price of a home from GBP149,800 (HK$2.33 million) to GBP176,700. But that super-charged growth in prices is now showing signs of slowing.

'Aberdeen has been bucking the national trend to a certain extent,' said Ryan Forbes of Aberdeen-based estate agency, Remax. 'But prices are steady at the moment and in some areas relatively quick sales are being made.

'It is always going to be protected by the oil industry - people are moving in and out of the area all the time, so it is a buoyant market. The only problem is mortgages. Very often we have buyers, but a purchase falls through, because they can't get a mortgage.'

According to estate agency Strutt & Parker, the top end of the market in Aberdeen and surrounding areas is strong with some homes selling for 30 per cent or more above the asking price. 'Within a 15 to 20 mile radius of Aberdeen the market is fine. The further you go away, the less strong it is,' said Nikki Coutts, an associate at Strutt & Parker. 'Buyers include people working in the oil industry and people relocating because of the oil industry. Properties around GBP500,000 or more are doing well.'

Estate agents said investors from Britain and overseas, including Singapore and New Zealand, were buying property, but if oil prices remained high or continued heading upwards, they might undermine future sales of Aberdeenshire country houses which potential buyers visit by car.

'As a result I think property prices will probably sit where they are in the next six months,' said Ms Coutts, 'because the price of diesel means people cannot afford to fill their cars and view properties.'