Aberdeen house price fall blamed on oil slowdown and LBTT

A new report published by Aberdeen Solicitors’ Property Centre Limited (ASPC), in co-operation with the University of Aberdeen, Business School, Centre for Real Estate Research, shows that sales in the second quarter were down 9.4 per cent on the same period last year.

The second quarter of the year is usually the most active period for sales.

John MacRae, chairman of the ASPC board of directors, said the slowdown of the North Sea oil sector and the introduction of the Land and Buildings Transaction Tax (LBTT) had a definite negative impact on sales.

House prices in Aberdeen city and suburbs increased by 0.1 per cent in the second quarter, compared to a 8.5 per cent increase across Scotland and a 3.3 per cent increase across the UK.

The average price for a flat was £167,589, a semi-detached house was £231,904, and a detached house was £355,782.

Mr MacRae explained: “The second quarter figures for 2015 demonstrate that, generally, house prices in our area have remained steady but the volume of sales has dropped.

“In my note to the figures for the first quarter of 2015 I mentioned the varied background features affecting our local market, not just the headline oil industry difficulties.

“We are now in a position where the effect of the change from stamp duty land tax to Land and Buildings Transaction Tax is beginning to wear off as the market becomes conditioned to the changes.

“Nevertheless part of the reason for the decrease in numbers of sales will be attributable to a certain section of the market above £350,000 being less active than before due to the higher incidence of LBTT in that sector.

“Undoubtedly, the continuing problems in the oil industry will also be having an effect and, given past experience of similar situations, I do not think that the effect of the oil price is yet fully reflected in our local market activity.

“Given the economic background in this area, however, the 2015 figures are holding up very well and there should not be an unduly pessimistic outlook for our market given that there are positive features (the low cost of borrowing, the good activity in starter homes and flats) in our market.”