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Success stories need to be kept in perspective

Anyone who has ever been to Aberdeen will know it is quite often colder than other parts of Scotland, but for some time now it has also existed in its own economic climate.

It was the only major UK city to grow its economy during the recession, unemployment has remained relatively low, and wages have outstripped most of the rest of the UK and Scotland. Like any other big city, it is not immune to the problems of deprivation and drugs, but economically, socially and culturally, Aberdeen is flourishing.

The decision of the housebuilder Cala Homes to open a dedicated division for Aberdeen should, therefore, come as no surprise. Part of the city's continuing success story has been its property market, with recent figures from Lloyds showing that the average house price in the city virtually doubled in the last 10 years, from £104,288 to £202,120 - a rise greater than in any other city in Scotland.

Cala realises this growth is likely to continue, thanks largely to the revival in exploration of oil and gas in the North Sea, and it has a plan to ensure it is part of that success. Until now, it has had two divisions in Scotland but will now have a dedicated division for Aberdeen and the surrounding areas, a move the company believes will help improve sales.

There is logic to this plan as there is a strong demand for new homes in Aberdeen and a lack of availability at the top end; a need Cala intends to meet with a site in Cults and another 15 developments ready to go before the end of 2016. The building work will also bring new jobs and the economic good fortune will not be restricted to the city itself as house building is also flourishing in commuter areas around Aberdeen.

But there are some caveats to the success story, the first being the danger of a focus on one economic region to the detriment of others. As has been seen in London, where Cala has formed two new divisions, runaway success in one part of the country can suck investment from others - or in the words of Evan Davis in his recent programme London Vs The Rest, if you keep feeding only one engine, other, equally valuable, economic engines will stutter.

The reality is that hotspots such as London and Aberdeen exist in their own worlds in many ways, fed by unique economic circumstances. But the continuing revival of the property market, with Aberdeen at its pinnacle, also carries risks. There is a need for large homes at the top end in places like Aberdeen, but there is also a need for affordable housing across the country. Meeting one need without meeting the other carries the risk of the market overheating again as house-buyers scrabble to keep up. While Aberdeen has a lot going for it, it is not immune to the dangers of a property bubble just like the one that burst so spectacularly six years ago.

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