Blog: Now is the winter of our discount-rent: How the Aberdeen property price slump provides an ideal investment opportunity for everyone

Jamie Robertson, solicitor in Thorntons’ Residential Property team highlights investment opportunities in the Granite City due to fall in house prices.

Aberdeen as a city has long divided opinion. Those who live there have traditionally seen it as a granite-coloured-metropolis, a place where buying your home was not just securing a roof over your head, but it also represented an iron-clad guarantee of high future return. Whilst others looking at it from the outside, saw a market where demand outstripped supply, with property prices increasing at an eye-watering rate, yearly (if not monthly) fuelled by an oil industry that paid salaries which perpetuated the house price arms race, putting it out of parity with the rest of Scotland.

However, given the drop in the world oil price, the situation has now been flipped on its head. Properties in Aberdeen are no longer flying off the shelves in a matter of days, similar to the way the Edinburgh market currently experiences. Instead, the downturn has forced many buyers to re-evaluate their personal circumstances, and reassess what constitutes a realistic price for purchasing a property, thus eliminating large offers over valuation.

Conversely it has also forced sellers to reassess their expectations of what they would accept in terms of offers to purchase. The writer has seen through out the course of the last 12 months a position whereby offers are being made, and accepted, on average at 10 per cent below the Surveyor’s Home Report valuation. In the more high-end property (£300,000 and above), that figure has been seen to increase to more than 20 per cent below valuation.

The above has a two-fold effect – firstly, it returns the local market to a place where sellers, although they take a drop in their own sale price, can make a similar saving when it comes to their own purchase. Secondly, and most importantly in the writer’s opinion, the current Aberdeen and Aberdeenshire market represents the ideal opportunity for buy-to-let investors or buyers looking to relocate, purchase for the first time or who simply want to move into the area to bag a bargain.

Although many view Aberdeen’s success (and failure) as being symbiotic to that of the oil and gas industry alone, there are many other industries and sectors within the local economy which are thriving, but simply do not make the news headlines. This coupled with the commitment by OPEC (the oil and gas-producing countries forum) to cut production with a view to increasing price and demand, suggests that a recovery for the industry and the city is on the horizon. Notwithstanding this fact, Aberdeen has two well-established Universities which, regardless of local economics, continue to attract tens of thousands of students annually, from all around the world, all of whom require accommodation. These facts point to a position whereby there is clear investment opportunity available, but only for a limited timeframe, given the green chutes of recovery being seen.

jamierobertson@thorntons-law.co.uk