House Price Comment

With the BBC reporting UK House prices are firmly on the rise, and the Express reporting that prices are rising at their fastest rate since 2007, it may be worth a brief pause to think about what this actually means in real terms.

On the face of it, house price increases are generally an indicator of a strong, stable or recovering economy, and that in itself is, of course, something to celebrate. However, whilst house prices have generally increased in the last 20 years, the Independent reports that the gap between house prices and salaries is widening and if house prices are increasing at a higher rate than salaries, property becomes generally less affordable. This is particularly pertinent for first time buyers who, with no previous house equity to help their cause, often really struggle. And with no first time buyers entering the bottom of the property ladder, those further up the ladder won’t be going anywhere fast either!

The other main concern with property prices rising too quickly is that this can cause a property bubble, and even the threat of a ‘boom-and-bust’ scenario is enough to have a cooling effect on the market. In some instances, this can become a self-fulfilling prophecy as those desperate to sell before a suspected crash, will reduce their house price to secure a quick sale, but in doing so, contribute to falling houseprices!

So how does this apply to Oban and Argyll? 

Well, in general, national circumstances seem to have a reduced effect on the Argyll property market, akin to dropping a stone in a pool of water where the ripples become less pronounced the further out you go. We saw this during the recent recession where, whilst the market certainly slowed in Argyll, prices did not appear to drop significantly (and certainly not to the magnitude of the 20%+ drop seen in some other areas of the UK).

Of course, all towns and cities have their own individual factors which will affect house prices regardless of what is happening at a national level, and we’re lucky here in that the many great accolades and attributes that make Oban and Argyll such a great place to live, helps ‘insulate’ us from the worst of the national effects. Titles such as ‘The Gateway to the Isles’ and ‘The Seafood Capital of Scotland’, in addition to Oban’s beautiful seaside location, contribute to a consistent and stable draw to the area which in turn supports a sustained demand for property here.

And so, whilst London is seeing a perhaps unsustainable 18.7% year-on-year increase, the office for national statistics are reporting Scotland’s increases at a more modest (and sustainable!) 4.8% – good news for us!