The highest and the lowest price growth in key cities around the UK are both in Scotland with Edinburgh recording a rise of 5.8% and Aberdeen a fall of 4.8% in the last 12 months.
These are interesting figures from the latest Zoopla cities index as the report itself talks about affordability and how Birmingham has fallen to ninth place while London seems to be improving.
But it is the figures for Scotland that are significant because they show that the local economy, in terms of investment and jobs in particular, is really important. The economy in Aberdeen has suffered significantly with the slowdown in the oil industry. The index report does not go into this so we have to look elsewhere to get an understanding of what is happening.
It is not all doom and gloom. Indeed, according to the latest quarterly report from Aberdeen based estate agents and law firm Aberdein Considine, confidence is returning to the Aberdeen market after years of sluggish economic activity.
It says that there is some evidence that the market is returning to some level of stability, but it will be a slow turnaround with prices falling for four years now. But there are other positive signs for the city. Its industrial property sector is continuing its recovery following a record number of transactions last year, according to research from global real estate firm CBRE. It explains that on the back of a more stable oil price, take-up was the highest it had been since the 2014 oil price slump.
Edinburgh, on the other hand, does not have enough supply to meet demand. Wherever you look in the city new homes are being built and in the city centre development is centred on student accommodation and aparthotels as the demand for short term lets has also soared.
Scotland is consistently outperforming other parts of the UK and the talk is that Brexit has not affected it as much as London and other parts of the Southern half of England. But there is a much bigger danger to the Scottish property market and that is independence. I am not an economic expert but there are serious doubts about the ability of the Scottish economy to perform if it left the UK.
There is an appetite for another referendum and if that were to come about and Scotland was to vote to leave the UK there would be another long, protracted period of economic and political uncertainty and I am not sure that the nation would come out of it glowing. It would almost certainly have a negative impact on the property market.
Then there is the Northern Powerhouse and what the Government will do in terms of the review it has set in place of rail links. Who knows if the current level of investment will be sustained. This potential uncertainty comes at a time when cities like Manchester, Liverpool and Leeds have been seeing stronger property price growth than cities in the South.
It is a reminder to us all that property prices really are local, as local as city-wide in terms of Aberdeen, and that they are affected by economic and political uncertainty on a more regional level too.
Ray Clancy
Editor Property Wire
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