Research article

Sentiment is everything

Aberdeen Residential Development Survey

Following a period of inactivity within the Aberdeen Housing Market Area, is sentiment within the development sector improving?

Savills prepared an anonymous survey to gauge the level of market appetite and gain a better understanding of the key challenges affecting house building in the local market. Our survey attracted answers from niche developers to large housebuilders including those currently active in the market and those expressing an interest.

Performance & forecast

60% of our audience rated the existing Aberdeen development market to be either cool or freezing, with 36% thinking it was neutral and only 4% thinking it was warm. This sentiment is undoubtedly driven by performance, with 89% of active sites performing as or worse than expected.

Looking forward over the next six months, 64% of our audience are of the opinion that the market will remain cool while 20% think the market is going to get warmer. Interestingly, those active in the market were more optimistic than those not.

Of those actively developing in the area and those considering it, uncertainty, market conditions and profit margin were rated as very important factors when considering development opportunities, with technical issues, build cost and planning issues not far behind.

Buyers & incentives

Active housebuilders confirmed that more than 50% of sales were reliant on incentives with payment of LBTT, Part Exchange and Help to Buy being the three most prevalent incentives.

Despite this, purchasers are still motivated by the location and specification rather than incentives on offer. Positively, sites are attracting a range of purchasers including first time buyers, families and downsizers.

Business appetite

Encouragingly, of those businesses active within Aberdeen, the majority plan to scale up their operations in the next few years with 50% looking for new sites. Of those not active, many expressed an interest should market conditions improve. This suggests a more positive outlook in the medium term.

Asking prices for available new build properties

Asking prices for available new build properties
Source: Savills Research

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