House prices hold up best in cities

House prices in cities have risen by more than the UK as a whole over the past decade, according to new figures from Halifax. Excluding eight of the 69 ‘official’ cities in the UK (City of London, Wells, Armagh, Ripon, St David’s, Newry, Bangor and St Asaph due to an insufficient sample size) their figures suggest that prices in cities increased by an average of 38% from £125,276 in 2002 to £173,322 in 2012.  This beats the 29% rise for the UK as a whole.

Martin Ellis, housing economist at Halifax, said: “The majority of cities have also outperformed their region. The experience of towns that have been made cities since 2000 has been mixed.  Some have gone on to outperform their region after gaining city status whereas they had underperformed previously. This, however, has not always been the case.”

The Scottish cities of Aberdeen (94%) and Inverness (81%) recorded the biggest price rises between 2002 and 2012. Two other Scottish cities – Dundee (73%) and Perth (70%) – also feature in the top five.  The dominance of Scottish cities partly reflects the outperformance of house prices in Scotland relative to the rest of the UK over the past decade.  Aberdeen has seen particularly sharp price increases due to the importance of the oil sector to the local economy.

The two English cities recording the strongest increases are both in Yorkshire and the Humber, Bradford (77%) and Hull (68%).  The region generally has outperformed the UK in terms of house price performance over the past 10 years and average prices in Bradford and Hull are relatively low – both are among the five cities in the UK with the lowest average prices – providing the potential for stronger gains than cities with higher prices.  All ten cities experiencing the biggest price increases are in northern Britain.

The Northern Irish cities of Lisburn (2%) and Belfast (3%) have seen the smallest price rises over the last ten years, largely reflecting the substantial decline in house prices across Northern Ireland since 2007. Ely (14%) and Southampton (16%) have recorded the smallest increases in England.

At a time when there are growing concerns about the affordability of property, the majority of cities have outperformed their region in terms of house price growth since 2002. Two-thirds (67%) – 41 of the 61 cities surveyed – recorded average house price increases above their region’s average over the period.

Cities have done well in relative terms in the five years since the housing market peaked in 2007. House prices in cities have fallen by an average of 17% since 2007 compared with the UK average decline of 23%.  70% of cities recorded a better house price performance than their region between 2007 and 2012.

Towns that have become cities since 2000 have, on average, outperformed the country as a whole during the past decade. Eleven towns have become cities since 2000.  On average, these new cities have seen house prices increase by 39% since 2002. This is closely in line with the average rise for all those places that have been cities throughout the last decade (38%), but is above the 29% increase for the UK as a whole.  Six of the nine¹ new cities analysed have outperformed their regions over the decade: Newport, Stirling and Lisburn are the exceptions.

All three towns that became cities in 2000 – Brighton & Hove, Inverness and Wolverhampton – have recorded stronger house price growth than their region over the past decade.

The experience of those towns that became cities in 2002 to coincide with the Queen’s Golden Jubilee has been mixed.  Preston recorded stronger price growth than its region between 2002 and 2012 whilst Newport, Stirling and Lisburn underperformed relative to their region. During the decade prior to 2002, Stirling and Lisburn outperformed their region whilst the others underperformed.

10 Cities with highest house price growth, 2002-2012

10 Cities with lowest house price growth, 2002-2012

10 Cities that have outperformed their region the most, 2002-2012

For more on property prices see Tuesday’s blog post Average price of a new home is now £229,571

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• organaphus

  Just for the sake of balance, I live about 7 miles north west of the city of Chester, where a bungalow which was valued at £160,000, has been sold for £80,000.

• http://twitter.com/andymcrowe andy crowe

  How sad that the Independent is falling for the estate agents’ propaganda that high house prices are a good thing. Instead of ‘outperforming’ you should be saying that city prices remain unaffordable for most people.’ Lazy.

• http://twitter.com/daddacool Daddacool

  The important thing to take from the Halifax’s figures is they are the Halifax’s figures. If you look at the Land Registry figures, they show much lower average prices and much lower growth.
  That’s because Halifax only show the average prices for transactions they are involved in. If they’ve become more risk adverse in the last three or four years, they’ve been lending to more people with existing equity, people who are moving up the housing ladder, spending more on their next property. The increase in average house price per Halifax then doesn’t reflect the average house price as a whole. It’s a massively incomplete picture.

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