High employment sees house prices rise
Adam GuestHomeowners in the isles have seen the value of their property increase by almost a third since 2009, new research by the Bank of Scotland claims.
Properties in Shetland have increased by 31 per cent – £39,311, helped by Shetland having the highest employment rate in Scotland since the trough in the last housing market cycle six years ago.
The average house price in the 12 months to March 2009 was £128,795 in Shetland.
The average in the 12 months to March in 2015 was £168,106. Employment in Shetland from 2009 to 2015 was 82.6 per cent, the research says.
Aberdeen City has the second highest house price increase in Scotland during the same period with property costs going up 21 per cent or £38,275, followed by Aberdeenshire with a 16 per cent increase of £33,032.
Both areas are amongst the five areas in Scotland with the highest levels of employment over recent years.
The Bank of Scotland said there is a clear link between levels of employment and house prices.
“Those areas with the highest average levels of employment since 2009 have, on average, recorded bigger house price gains,” it said.
The five local authority areas with the highest employment have experienced average house price rises of 14 per cent – £23,462 since 2009, compared to an increase of two per cent for Scotland as a whole.
Those areas with the highest level of unemployment have typically underperformed the Scottish Average, the Bank of Scotland said.
The 20 areas with the highest levels of unemployment have an average house price fall of eight per cent – £11,252.
Nitesh Patel, economist at Bank of Scotland, said: “There has been a very clear relationship between conditions in the Scottish jobs market and house price performance during the period since the housing market downturn between 2007 and 2009.
“Those areas with high levels of employment have tended to record above average house price growth. Areas with high unemployment levels have, on the other hand, typically underperformed.
“The past few years have underlined the importance of local economic health in determining house price behaviour. Other factors, however, are also key drivers of house price trends including the strength, or otherwise, of housing supply.”
Neil Risk of Neil Risk Solicitors said the link between high employment and house prices was common sense.
House prices had risen, he said but whether they had to such an extent he did not know.
His business did not keep statistics and were dealing with different properties rather than the same properties over and over again.
In the first couple of years after the recession prices plateaued, said Mr Risk but prices had risen in the last four or five years.
An ex-council house in Lerwick would fetch £160,000 if it was in decent condition, he said.
Paul Barnett
Employment has nothing to do with it (Shetland has always had high employment) lack of housing and ridiculous rental rates is driving house prices upward
.
Ali Inkster
Considering that elsewhere oil companies are paying $70,000 a month for a 5 bedroom house with a corrugated iron roof I might add, rentals to the oil industry here don’t seem all that ridiculous here. Unless of course you think it is ridiculous that Shetland is not cashing in fully on what is after all a short term opportunity.
Stephen Johnston
I make the average price for the 12 months to March 2015 to be £150,970. We’ve seen these statistics annually for some time now – they don’t appear to be getting any more accurate. Will contact Mr Patel tomorrow and find out how the published figures are calculated.
Robert Duncan
Paul Barnett, of course employment has something to do with it. Shetland may always have high employment, it doesn’t always have employment at over 100% of the settled population, as we do now with thousands of transitory workers requiring accommodation alongside those living here permanently.
The lack of available housing the rocketing cost of rentals (there was a one-bedroom ‘apartment’ recently advertised in Lerwick for £850 a month) are almost entirely due to oil companies distorting the market.