Sell up or wait it out

Pixie5740

Crashy, in what way are any of your posts helping the OP? I can't recall any poster saying that house prices in Aberdeen would never crash and even if someone did that doesn't help the OP with the situation she and her husband are in now.

The OP has already said that it's a 5-bedroom house and in 2013 if you wanted a house that size in Aberdeen rather than Aberdeenshire, then £450k+ sounds about right. Not that any of this helps the OP. She is where she is.

Crashy_Time

Pixie5740 wrote: »

Crashy, in what way are any of your posts helping the OP? I can't recall any poster saying that house prices in Aberdeen would never crash and even if someone did that doesn't help the OP with the situation she and her husband are in now.

The OP has already said that it's a 5-bedroom house and in 2013 if you wanted a house that size in Aberdeen rather than Aberdeenshire, then £450k+ sounds about right. Not that any of this helps the OP. She is where she is.

It is probably good for potential buyers to know that the predictions of many people in the media and on forums (who invariably are involved in mortgage lending, or have sizeable mortgage borrowings) about future property benefits are to be taken with a large lump of salt, always DYOR. I was looking more for links to the type of property selling at those prices, because 500k could be good value for a five bed house in some cases (but obviously not in others)

Nebulous2

If you bought at £340k and can get £320k back that's pretty good going.

There are a lot of factors at play in the North-East. In the boom years there wasn't enough building. Builders got a lot of planning permission through in Aberdeen and have tended to keep building those, albeit more slowly than they would have done. They're doing a lot of part-exchanges, so that is a bit of an overhang in the market.

Rentals were extremely good, even for poor quality flats, underpinned by two universities and lots of students. Along with the new house building there has been a lot of student accommodation built, which has undermined the rental market - which has seen big drops in rent.

We've been here before though. In 1986 the oil price collapsed and Aberdeen was on its knees. House prices dropped dramatically - this time the reduced prices have been managed much better. By 1990 it was flying again. Much of the UK had a house price recession in the early 90s and Aberdeen didn't.

There's a couple of points worth bearing in mind there - Aberdeen's economy and housing market is divorced from the rest of the UK - and no-one knows what the price of oil will do.

Crashy_Time

Nebulous2 wrote: »

If you bought at £340k and can get £320k back that's pretty good going.

There are a lot of factors at play in the North-East. In the boom years there wasn't enough building. Builders got a lot of planning permission through in Aberdeen and have tended to keep building those, albeit more slowly than they would have done. They're doing a lot of part-exchanges, so that is a bit of an overhang in the market.

Rentals were extremely good, even for poor quality flats, underpinned by two universities and lots of students. Along with the new house building there has been a lot of student accommodation built, which has undermined the rental market - which has seen big drops in rent.

We've been here before though. In 1986 the oil price collapsed and Aberdeen was on its knees. House prices dropped dramatically - this time the reduced prices have been managed much better. By 1990 it was flying again. Much of the UK had a house price recession in the early 90s and Aberdeen didn't.

There's a couple of points worth bearing in mind there - Aberdeen's economy and housing market is divorced from the rest of the UK - and no-one knows what the price of oil will do.

Oil was more plentiful and cheaper to extract 32 years ago, and people didn`t have anything like the access to credit they have had lately? The latest property bubble happened with record oil prices and a one off global credit bubble, so not comparable to the previous property crash IMO. One of the biggest mistakes Aberdeen and Aberdeenshire have made IMO is that they don`t really have an economic plan B that isn`t fantasy (Like Aberdeen becoming a "Centre of excellence" for training, or that oil "must" bounce back etc. Generations of school leavers have just assumed that big money was a given if you were prepared to sit on an oil rig for two weeks at a time, and didn`t really consider that the money could evaporate.

Nebulous2

Crashy_Time wrote: »

Oil was more plentiful and cheaper to extract 32 years ago, and people didn`t have anything like the access to credit they have had lately? The latest property bubble happened with record oil prices and a one off global credit bubble, so not comparable to the previous property crash IMO. One of the biggest mistakes Aberdeen and Aberdeenshire have made IMO is that they don`t really have an economic plan B that isn`t fantasy (Like Aberdeen becoming a "Centre of excellence" for training, or that oil "must" bounce back etc. Generations of school leavers have just assumed that big money was a given if you were prepared to sit on an oil rig for two weeks at a time, and didn`t really consider that the money could evaporate.

You're trying to impose your own narrative on this, which doesn't fit with the facts. The North Sea has always been inhospitable and difficult to extract oil. Back then rigs were bigger and needed more people. Most of the companies were foreign and brought their own staff with them - a lot of Americans for instance. You're describing sitting on an oil rig for two weeks at a time in a derogatory manner, but its actually quite an onerous thing to do. It's also very hard for family at home, especially if they've relocated and don't have family support networks around them. Ex-fishermen were ideal, because they were used to the lifestyle, appreciated the fact their bed no longer moved, and their families were adapted to the present / absent figure.

Aberdeen at that time very much had a bubble. At one point some of the measures showed it as the most expensive in the UK, more expensive than London. When the oil price crashed the economy did the same. A lot of the foreign workers went home. There were tales of people simply posting the keys of their house through the building society letter box and disappearing. I had an acquaintance who paid £52,000 for a new house. About a year later the builder sold a house of the same type on their street for £27,000 cash, to try and maintain some cashflow.

Then the oil price picked up. Many of the jobs that had been done by foreigners now went to locals. I have a friend in a highly paid job who swears that crash was the best thing that could have happened to the North-East. By 1990 the prices had recovered and then exceeded their previous highs. We looked at a two bedroom granite flat in the West-end in 1987 which was needing windows, kitchen and bathroom for £23,000. By 1991 it was worth over £100,000. The rest of the UK went through a house price recession in 1991 which didn't touch Aberdeen at all. Houses were regularly going at 25% above asking price.

So I don't know what will happen, but it has bounced back before and could again. The cities in Scotland including Aberdeen are projected to have an increase in population over the next 20 years or so. There is a difference between oil prices and profitability. Costs had become so bloated that companies weren't making a profit at over 100 dollars a barrel. They have cut costs so far that they now can at 50. There are also new developments coming on stream and they have become much better at maximising extraction - getting oil out that they didn't previously think was economic or even possible.

Crashy_Time

The problem with your narrative for me is that it assumes high house prices are a good thing, the fact that they are not is underlined by this thread, people can`t just sell and move for the price they paid if there is a downturn, and people not in highly paid jobs get priced out of decent areas as well. Also Aberdeen didn`t seem to learn the lesson of that first downturn, instead of thinking harder about an economic Plan B the local councils and some of the highly paid population it seems just went Woo Hoo house prices are going up again, lets get some gold taps and party hard? Hoping for a repeat of 1991 just seems like wishful thinking to me, and I don`t buy the population projections either, they tend to get trotted out by the same media outlets that rely on advertising revenue from ads for over-priced houses, if anything the population of Aberdeen is going to decline, not increase IMO.