The most recent Citylets reports http://www.citylets.co.uk/research/reports/pdf/Citylets-Quarterly-Report-Q1-16.pdf brings some sobering reading for the Aberdeen market. Amongst other information it highlights that average rents in Aberdeen have fallen by more than 20 % over the past year. It adds further that this is the steepest decline ever recorded in any report that Citylets has produced.
So what does this all mean? What does the future hold for the Aberdeen Market? And most importantly how can landlords and tenants benefit from this current situation?
Recently the government has been taking lots of action in the private rental sector. New legislation has been and continues to be passed on various aspects relating to renting out a private property. Making it a tough time for landlord and agents. Furthermore there has been a lot of talk about imposing rent control in certain sectors in Scotland “rent hot spots”. Aberdeen has often been used as a prime example as justification for this to cap rents at a certain level. Due mainly to the downturn in oil and gas we have seen a dramatic fall in rent values as detailed above, however this dramatic fall also clearly demonstrates that the market self corrects through cycles and albeit we are experiencing the lowest point currently it provides evidence that such rent control action may not be required. So not all doom and gloom as long term it may create a healthier supply of rental properties and of course ensure that tenants can afford to pay rentals, which of course every landlord needs a tenant that can afford to rent the property.
With the fall in rental values tenants have been able to find good quality accommodation at more competitive prices than before in Aberdeen. It has also been recently pointed out that the fall in rent may well open up to new markets that could not previously afford to rent and may well fill some of the posts that are vacant in key sectors in Aberdeen as new jobs are filled now that affordable accommodation can be secured. A word of caution must also be pointed out to tenants at this time. The cheapest flat on the market is indeed not necessarily the best flat on the market. Some questions to consider. Does the landlord have an agent to ensure that the property is legally compliant with all recent changes? At such low rentals will my landlord be able to afford to maintain the property to the standard I expect if anything goes wrong in the property? What are my landlords future plans for the property, is there a plan to maintain and upgrade the property to make my place e a safe and enjoyable place to call home?
Some key statistics of how the market has performed first quarter;
Average rent of a property in Aberdeen now down to £865 per month (higher than national average)
Average time to let has now increased to 53 days
Percentage of properties let within a month fallen to 34%
The average time to let for a three bed is quicker than a two bed in Aberdeen
(Citylets Quarterly report – Q1 2016)
Comment on statistics:
Northwood Aberdeen was please to comment in the Citylets report with the below:
Q1 has brought fresh challenges for the Aberdeen rental market. With the
downturn in the oil and gas industry TTL has increased across the board and
average prices are still lower than the levels landlords have been used to. Yet,
there is still plenty demand for properties that are marketed well and competitively
priced. With so much choice available for tenants it is critical for landlords to
ensure that their properties are presented to the best possible standard – Matt Pullinger
We still remain very busy in the current market albeit at a lower price level. Enquires still come in each day showing that properties well maintained and realistically priced are still let well within the averages described in the above report.
Since the start of the year we have had well over 1000 enquiries on our portfolio and have let several properties at prices above average prices.
We have also seen several landlords, due to what’s going on in the market consider selling their property. Some have not materialised the sale they hoped for and have come back to successfully rent out their property again with us until things change in the current market.
So what does it all mean?
The market goes through cycles, usually linked strongly with the oil and gas market in Aberdeen. As the downturn has been a particularly bad one for many individuals and families in Aberdeen in oil and gas the same has been true to an extent for the rental market, however properties are still renting out but at lower levels.
Longer term this will mean that the stock will change in the market and as the forces of demand and supply also change there are many positives that can be seen in the future through this period.
For more information and to discuss your property whether you are a landlord or tenant feel free to get in touch with the team at Northwood Aberdeen today.
Written by Matt Pullinger