Shetland Isles high employment rate fuels £39k house price rise since 2009
Homeowners in the Shetland Isles have seen the value of their property increase by £39,311 (31 per cent) since the trough of the last housing market cycle in 2009 on the back of having the highest employment rate in Scotland, new research by Bank of Scotland has found.
There is a clear link between levels of employment and house price performance in recent years.
Those areas with the highest average levels of employment since 2009 have, on average, recorded bigger house price gains.
Aberdeen City has the second highest house price increase in Scotland since 2009, with property prices going up 21 per cent or £38,275, followed by Aberdeenshire with a 16 per cent increase of £33,022; both are amongst the five areas in Scotland with the highest levels of employment over recent years.
The five local authority districts (LADs) with the highest employment have experienced average house price rises of 14 per cent (£23,462) since 2009, compared with an increase of 2 per cent for Scotland as a whole.
The average house price in the 10 LADs that recorded the highest employment rate between 2009 and 2015 rose by £9,554 (6 per cent). However, looking further afield to the top 20 LADs, they have seen an average increase of only 2 per cent (£2617); in line with the average for Scotland.
In stark contrast, those areas with the highest levels of unemployment – as measured by the claimant count - have typically underperformed the Scottish average.
The 20 areas with the highest levels of unemployment have recorded an average house price fall of 8 per cent (£11,252).
The five areas with the highest unemployment rate have seen a 7 per cent drop in the value of their homes.
Nitesh Patel, economist at Bank of Scotland, said: “There has been a very clear relationship between conditions in the Scottish jobs market and house price performance during the period since the housing market downturn between 2007 and 2009. Those areas with high levels of employment have tended to record above average house price growth. Areas with high unemployment levels have, on the other hand, typically underperformed.
“The past few years have underlined the importance of local economic health in determining house price behaviour. Other factors, however, are also key drivers of house price trends including the strength, or otherwise, of housing supply.”