The last year has been one of dramatic change in both the local and national housing market.

At the end of 2008 a significant number of mortgage products were removed from the market as bank liquidity became a major issue.  Lending was significantly reduced and, combined with the onset of an economic recession, both prices and the number of sales fell dramatically.

Property prices in Aberdeen and Aberdeenshire, as measured by the Aberdeen Solicitors’ Property Centre database, reached a high point between mid 2007 and mid 2008.  From the second quarter of 2008 prices in the area gradually decreased with the low point being reached in the first quarter of 2009.  The average price of a property at that time was 10% down from peak prices.  Average prices were back at a level not seen since the end of 2006.

Since the first quarter of this year however average prices have been gradually increasing.  The last available figures to the end of the third quarter of 2009 show that the average house price in Aberdeen and Aberdeenshire has bounced back to above £200,000, the equivalent of late 2007/early 2008 prices.

As a result of a number of factors, predominantly the uncertain economic outlook and the well publicised decline in house prices, the volume of properties for sale decreased dramatically during the course of the year.  Indeed the number of properties selling is at its lowest level this decade.  In most years the second quarter is traditionally the most active but in 2009 the level of activity in the third quarter was greater and, with prices steadily rising once again, these are optimistic signs for the future.

The introduction of compulsory Home Reports at the end of 2008 may have had an impact on the number of properties placed on the market for sale.  Home Reports however now seem to have been accepted in the market place and recent experience suggests that in the local area most buyers are able to achieve at least their valuation price and, in many instances, closing times are returning and owners are achieving prices in excess of their Home Report valuations.

One factor that requires to be considered when looking ahead to 2010 is the end of the current “stamp duty holiday”.  Last autumn the government temporarily increased the stamp duty threshold so that only properties purchased for in excess of £175,000 were liable for stamp duty.  From 1 January 2010 this temporary arrangement ends and the stamp duty threshold reverts back to the previous figure of £125,000.  There will therefore be a significant number of properties which will again become liable for taxation, adding on average an additional £1,500 to the cost of purchasing a property.  How this impacts a still delicate market remains to be seen.

With steadily rising property prices and activity in the housing market continuing late into 2009 there are positive signs and reasons for optimism leading into 2010.  How the market picks up in the first quarter, after the holiday period, will be a key indicator as to how the market is likely to develop during the course of the coming year.