While average house prices across the UK have risen by 5%, prices in Aberdeen have fallen 10% since the Brexit vote* – more than anywhere else in the UK, as uncertainty over economic prospects hits one of the UK’s most prosperous cities of recent years, says Lendy, one of Europe’s leading peer to peer secured lending platforms.
The average house price in Aberdeen, once the UK’s oil boomtown and nicknamed ‘Granite City’ owing to the prevalence of the stone in the area’s cityscape, was £164,000 in June 2017. This is down from £182,000 in June 2016 when the UK held its EU referendum.
Aberdeen comes at the bottom of the table measuring house price growth across 381 local authority areas across the UK, of which just 19 areas saw average price falls. Just a few years ago Aberdeen boasted the highest per capita concentration of millionaires anywhere in the UK.
Lendy says that concerns over Scotland’s post-Brexit future, together with the pressure of low global oil prices on Aberdeen’s heavily oil-dependent economy, have seen demand for homes fall sharply. The average house price in Aberdeen peaked at £199,000 in September 2014.
Lendy says that figures from Oil & Gas UK, the trade association for the UK offshore industry, show that the number of people employed in the UK’s oil & gas industry is now 35% below its 2014 high. This is likely to affect Aberdeen, the UK’s North Sea oil hub, more than anywhere else in the country.
Lendy adds that the sharp house price fall in Aberdeen shows the importance of diversifying when investing in property. While individual geographies can see sharp price falls over a limited period of time, this less likely unlikely to be replicated across a broad range of geographies and property types, meaning diversified investors are better-insulated from price falls.
Liam Brooke, pictured, co-founder of Lendy, comments:
“These figures highlight how rapidly Aberdeen’s fortunes have changed. Hard on the heels of the oil price slump, Brexit is piling the pressure on the once-booming Aberdeen property market.
“Given the sector’s importance to the Scottish and UK economy, issues such as whether there could be a second Scottish independence referendum and what that might mean for North Sea oil loom large.
“This reinforces just how important it is for property investors to diversify their investments. There will always be small pockets of the country where property prices dip, but if your investments are diversified geographically as well as by property type, those dips are likely to have a limited effect when they do happen.”