The Aberdeen House Prices & Rents thread

HAMISH_MCTAVISH

fun4everyone wrote: »

Yeah that makes sense thanks. I am not on HPC (that is the truth I promise!) but I did go on there and look the other night as it is referenced on here so much.

And the erroneous landlord comment was posted tonight on HPC... But whatever.

Yields in Aberdeen at the moment are terrible and supply FAR outstrips demand.

The data shows a far more nuanced position than you claim.



Rents are down a bit, but still well up on 2007 (almost double), rents are still almost the highest in Scotland, and prices remain reasonable enough to generate wholly satisfactory yields.

Voids have risen a bit in the last year, but are still roughly in line with national averages, so on the whole I'd say we're still doing surprisingly well.

A few years back my neighbour across the street rented his house (he works overseas) and it was let within 4 days of going to market for £1200 a month.

The rent rose to £1350 during the tenancy.

He just relet last week it as the tenancy had ended, it was empty for 17 days, and relet for £1250 a month.

So a dip to be sure and a longer void than Aberdeen has been used to, but hardly catastrophic, given the same place could be rented for £750 back in 2007...

For what its worth I do believe house prices in Aberdeen would have rocketed specifically in 2014 but the independence referendum caused a significant wobble. Once that was history the falling oil price took over.

Yes, I'd broadly agree with that, and expect it'll be a while before we start 'unwobbling'.

Good for me though if I can pick up a bargain.

fun4everyone

HAMISH_MCTAVISH wrote: »

And the erroneous landlord comment was posted tonight on HPC... But whatever.

Right so you are nitpicking I said I looked at it "the other night" when you posted it tonight. So I looked at it tonight, its the truth. You must be fun at parties.

The data shows a far more nuanced position than you claim.

You are not part of the rental market, I am. Data can be cherry picked and presented to push any point of view. There is nothing nuanced about the experiences of myself and other landlords in Aberdeen at the moment. It's what is actually happening. Rents are in free fall and supply far outstrips demand. That is the real life reality of the Aberdeen rental market at the moment. I suspect hotels specifically are doing badly as well.

HAMISH_MCTAVISH

fun4everyone wrote: »

You must be fun at parties.

As I usually prefer being right to being popular, it's pretty much the opposite.

Sorry about that.

You are not part of the rental market, I am. Data can be cherry picked and presented to push any point of view. There is nothing nuanced about the experiences of myself and other landlords in Aberdeen at the moment. It's what is actually happening. Rents are in free fall and supply far outstrips demand. That is the real life reality of the Aberdeen rental market at the moment.

I presented facts, objective data, based on real world achieved rents from hundreds of landlords and thousands of rental properties.

That shows rents are down just shy of 7% in the last year on average.

I don't doubt some areas are down more than that.

I've heard rents in crap parts of town are well into 20%+ decline from peak, but as always, the crap parts of town are a small minority.

But even at that they're still at a level that would make most of the country choke on their cornflakes.

I also suspect the data lags....

So I wouldn't be surprised to hear of bigger falls on average when the data catches up, with more to come, but that's hardly armageddon.

As I noted, some rental places are still going at close to peak prices, so it also varies by location.

fun4everyone

HAMISH_MCTAVISH wrote: »

As I noted, some rental places are still going at close to peak prices, so it also varies by location.

Rents everywhere in Aberdeen are currently down over 20% from peak values (When I say peak I mean 2 years ago to the day pretty much). The reality is the opposite of what you suggest, it is the nicer, more expensive properties that are not getting what they used to when the price of a barrel was a lot higher.

However what also seems to be the case is certain types of property are more likely to be successfully let out at the moment than others (albeit still for a lower price than a few years ago).

1 and 2 bedroom flats are specifically the worst. That is what the rental market is saturated with. Other types of property seem to be faring a bit better.

HAMISH_MCTAVISH

fun4everyone wrote: »

Rents everywhere in Aberdeen are currently down over 20% from peak values

My neighbour's house would suggest otherwise.

A few years back my neighbour across the street rented his house (he works overseas) and it was let within 4 days of going to market for £1200 a month.

The rent rose to £1350 during the tenancy.

He just relet last week it as the tenancy had ended, it was empty for 17 days, and relet for £1250 a month.

So a dip to be sure and a longer void than Aberdeen has been used to, but hardly catastrophic, given the same place could be rented for £750 back in 2007...

And the available data confirms it.

Some places are down 20%. Other are hardly down at all.

However what also seems to be the case is certain types of property are more likely to be successfully let out at the moment than others ).

Agreed.

1 and 2 bedroom flats are specifically the worst. That is what the rental market is saturated with. Other types of property seem to be faring a bit better.

Also agreed.

As to the overall market, you can give your experience, and I can give mine.

I have already cited the example of a house which rented for £750 in 2007 that has rented this week for £1250. That's down from the peak of £1350. But it's not 20% down...

As for yields, that same house was bought in 2007 for 190K, and an identical one a few doors down sold 2 months ago for 240K.

In 2007 the yield was 4.7%.

Today, after the rent dip and on current value, the yield is 6.25%.

Today, after the rent dip, and based on 2007 purchase price, the yield is 7.89%.

That's a huge profit margin above the 3%-ish interest he'll be paying on a 70% or so LTV mortgage...

And that's by far not the best yields in town...

Granted, it's not a 1 or 2 bed flat, but you've made some sweeping statements that in fairness I know for a fact are not correct for the whole market.

(and PM noted)

fun4everyone

HAMISH_MCTAVISH wrote: »

As to the overall market, you can give your experience, and I can give mine.

That's true and I note your neighbours experience (Which as we have already discussed is a house and they are faring through this downturn a lot better).

To be fair though, you are not involved in the rental market Hamish. Articles published always have an ulterior motive and data is behind and cherry picked. What matters is the actual reality of the current market and you can only really know how that is doing if you are directly involved.

I think if you are looking for a property to purchase then when they start coming online in the spring you will be in a buyers market, albeit not a completely crashed one. You could well pick up a reasonable bargain.


If I was looking for investment property in Aberdeen I would concentrate on the places available near the universitys.

Generali

HAMISH_MCTAVISH wrote: »

In terms of 'mild softening', none of the actual sold prices averages show anything more than this, and the stats don't lie... That may change in future, and I hope it does, but at the moment it's a fact.

Bob Shiller has done some work on house prices in falling markets and has come to the conclusion that when house prices are falling, indices cease to reflect the actual value of homes. The reason? Many people simply withdraw their house from sale until they can 'get what it's worth'.

Often in a falling market, averages and indices stop measuring the price that houses could sell for realistically in a normally functioning market. I would argue that part of the fall in sales volumes during and after the GFC reflected precisely that.

HAMISH_MCTAVISH

Generali wrote: »

when house prices are falling, indices cease to reflect the actual value of homes. The reason? Many people simply withdraw their house from sale until they can 'get what it's worth'.

I would argue that part of the fall in sales volumes during and after the GFC reflected precisely that.

Surely that's just a normal part of market forces...

For sales to take place you need to have both a willing and able buyer and also a willing and able seller.

The vast majority of vendors, even during times of recession, are not financially distressed. They don't need to sell, they might want to sell, but not at a price they aren't happy with. So if they can't get a price that's acceptable to them they'll remove from market.

It's certainly the pattern we saw in 2008.

mwpt

HAMISH_MCTAVISH wrote: »

The vast majority of vendors, even during times of recession, are not financially distressed. They don't need to sell, they might want to sell, but not at a price they aren't happy with. So if they can't get a price that's acceptable to them they'll remove from market.

It's certainly the pattern we saw in 2008.

Maybe the only thing that would really force prices lower and get transactions going is much higher interest rates.

westernpromise

HAMISH_MCTAVISH wrote: »

Surely that's just a normal part of market forces...

For sales to take place you need to have both a willing and able buyer and also a willing and able seller.

The vast majority of vendors, even during times of recession, are not financially distressed. They don't need to sell, they might want to sell, but not at a price they aren't happy with. So if they can't get a price that's acceptable to them they'll remove from market.

It's certainly the pattern we saw in 2008.

And 1989 - 1995.