The Rollercoaster Ride of Aberdeen’s Residential Property Market

The residential property market in Aberdeen has experienced significant fluctuations over the past 20 years. The market hit notable peaks in 2007, just before the global financial crisis, and again during the oil price boom of 2014, before stabilising in more recent times.

Flatted properties in Aberdeen have seen the most dramatic changes, with current sale prices in and around the city relatively low compared to past highs and other Scottish cities. Several factors contributed to this recent pricing trough:

  • Oversupply: Uncertainty around future investment in oil and gas led to the relocation of the specialist workforce to other locations.
  • Buy-to-Let Market Exit: Investors decided to leave the rental market due to diminishing returns, higher interest rates, increased regulation, and Scottish Government-imposed rent controls.

A Resurgent Rental Market

In the past year, Aberdeen’s rental market has experienced a notable resurgence. A significant supply and demand imbalance, driven by growing employment in the city and an increasing student population, has fuelled this recovery. The city centre remains particularly popular with renters seeking one- and two-bedroom flats due to the proximity to a wide range of amenities.

Student Renters: With Aberdeen’s two universities attracting a large student population, there is a high demand for housing near these institutions, notably in Old Aberdeen, near the University of Aberdeen and Garthdee, where Robert Gordon University is located. These areas boast a good supply of flats and houses that can be offered on a House in Multiple Occupation (HMO) basis, with landlords sometimes achieving more than £400 per room per month.

Family Renters: Families in Aberdeen are heavily influenced by access to good schools. With higher energy costs being a concern, modern, well-insulated properties are in demand, as are new houses that can command a premium.

Increasing Rental Prices and Investment Opportunities

Rental properties in Aberdeen are generally attracting numerous viewings and offers. Driven by high demand, average rental prices have increased by nearly 10% over the last year. Combined with low property prices—where many reasonable quality and well-located smaller flats are selling for less than £50,000—this environment presents residential investors with comparatively better returns than other areas.

In summary, while Aberdeen’s residential property market has had its ups and downs, the current rental market boom and low property prices offer promising opportunities for investors. The city’s ongoing evolution, influenced by economic shifts and demographic changes, continues to shape its real estate landscape.

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