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House prices: Best and worst performing UK areas in 2011

Cliff D'Arcy
by Lovemoney Staff Cliff D'Arcy on 27 December 2011  |  Comments 8 comments

We reveal the best and worst performing areas in the UK for rising house prices in 2011...

House prices: Best and worst performing UK areas in 2011

With the year almost over, it's time to take a look at what happened to prices in 2011.

As I have regional data only on a quarterly basis, I will review results for the 12 months to 30 September 2011. Given the slow state of the property market, these should be largely in line with the results for 2011 as a whole.

Let's begin by looking at the overall picture, using the Halifax House Price Index (HPI):

UK average house price

Quarter

House

price

Q3/2010

£166,961

Q3/2011

£163,154

Difference

£3,807

Difference

-2.3%

Source: Halifax HPI, Quarterly data by region, seasonally unadjusted

As you can see, the price of a typical home in the UK has dipped by almost £4,000 in 12 months. This is an average fall of 2.3%, which is much less than the steep falls seen between mid-2007 and the spring of 2009, when prices started to bounce back.

Where have house prices risen the most?

Averages invite comparisons, so let's see what's changed across the 12 regions of the UK. I've ranked these results from highest gain to largest loss:

1. East Anglia

Quarter

House

price

Q3/2010

£155,185

Q3/2011

£165,045

Difference

£9,860

Difference

6.4%

Londoners may be surprised to learn that prices didn't rise fastest in their great city. In fact, East Anglia pipped the capital to the post, with the price of an average home rising by nearly £10,000 (6.4%) in 12 months. Perhaps London commuters still see East Anglia as an attractively priced place to buy a home?

2. Wales

Quarter

House

price

Q3/2010

£134,539

Q3/2011

£139,971

Difference

£5,432

Difference

4.0%

In second place is Wales, with prices up by over £5,400 (4%) in 12 months to nearly £140,000. With property prices below the UK average, Wales has rebounded stronger than most regions in 2011.

3. North West

Quarter

House

price

Q3/2010

£122,953

Q3/2011

£126,325

Difference

£3,372

Difference

2.7%

Again, with the typical home priced well below the UK average, the 2.7% rebound in house prices in the North West of England secures it third place.

4. Greater London

Quarter

House

price

Q3/2010

£257,319

Q3/2011

£262,479

Difference

£5,160

Difference

2.0%

Despite costing almost £100,000 more than the UK average, the average price of a home in the UK's largest city rose by over £5,000 (2%) in 12 months.

Where have house prices fallen the most?

That's the end of the risers. Now let's discover the eight regions where prices fell in the year ending September 2011:

1. Scotland

Quarter

House

price

Q3/2010

£121,060

Q3/2011

£119,768

Difference

-£1,292

Difference

-1.1%

Prices in Scotland slipped by 1.1%, pushing the average price below £120,000, which is more than a quarter (nearly 27%) less than the UK average.

2. South East

Quarter

House

price

Q3/2010

£227,218

Q3/2011

£224,183

Difference

-£3,035

Difference

-1.3%

Prices in the affluent South East fell modestly: down just over £3,000 (1.3%), but still more than £60,000 above the UK average.

3. North

Quarter

House

price

Q3/2010

£125,250

Q3/2011

£122,002

Difference

-£3,248

Difference

-2.6%

Prices slipped by more than £3,200 (2.6%) in the North of England, in sharp contrast to the 2.7% rise recorded in the North West.

4. West Midlands

Quarter

House

price

Q3/2010

£154,449

Q3/2011

£149,830

Difference

-£4,619

Difference

-3.0%

The average price dropped over £4,600 to dip below £150,000 in the West Midlands, down 3%.

5. Yorkshire and the Humber

Quarter

House

price

Q3/2010

£125,386

Q3/2011

£120,757

Difference

-£4,629

Difference

-3.7%

In Yorkshire and the Humber, prices dipped over £4,600, down 3.7% in 12 months.

6. East Midlands

Quarter

House

price

Q3/2010

£146,405

Q3/2011

£140,663

Difference

-£5,742

Difference

-3.9%

In the East Midlands, prices dipped nearly 4%, with the typical home losing over £5,700 in value.

Lastly, we're into two areas where the house-price crash appears still to be in full swing:

7. South West

Quarter

House

price

Q3/2010

£196,157

Q3/2011

£178,116

Difference

-£18,041

Difference

-9.2%

I've long warned that prices in the South West (particularly in Devon and Cornwall) were way out of line with local incomes. Indeed, the price of the typical home here dived by over £18,000 (9.2%) in the past 12 months.

8. Northern Ireland

Quarter

House

price

Q3/2010

£128,731

Q3/2011

£109,743

Difference

-£18,988

Difference

-14.8%

After a huge boom caused by the end of the Troubles (Anglo-Irish hostilities) and the Celtic Tiger economy of the Republic of Ireland, house prices in Northern Ireland came crashing back to earth. Most recently, they have plunged nearly £19,000 (14.8%) to drop below £110,000. This makes the Six Counties the cheapest place to buy a home in the UK.

What's the lesson here?

As always, the most important lesson is that property markets are local, so what's happening in your neighbourhood, town, city or county may not be replicated in the rest of the country, and vice versa.

For example, while prices have been falling steeply in Northern Ireland and the South West, they have been creeping up in East Anglia, Wales, the North West and Greater London.

Even so, outside of these four recovering areas, prices are declining in the rest of the UK. They are being driven down by a four-year mortgage famine, rising unemployment, falling disposable incomes and poor consumer confidence.

To be honest, I expect these negative themes to continue well into next year, so don't put your hopes on any sudden rebound in UK house prices any time soon!

More: Compare the best mortgages at lovemoney.com

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Comments (8)

  • Amos
    Love rating 0
    Amos said

    Does this tell us anything at all? The Halifax Price Index is at the best a partial indicator of house prices. Why not take the Land Registry details which are at least factual? What's the lesson here? It's do your own research and don't rely on skewed and partial articles.

    Report on 27 December 2011  |  Love thisLove  0 loves
  • Arundel
    Love rating 2
    Arundel said

    Cliff, it would be more user-friendly if you made Ireland the no.1 faller and Scotland at number 8, and reverse all the areas between them. I glanced at Scotland and thought it had the largest fall in 2011 with a drop of only 1.1% and thought that wasn't too bad. I then went further down the list expecting to see smaller falls and was shocked to see that Northern Ireland had a 14.8% fall!

    The price indexes are only rough guides and I wish they were accurate in my case. I "sold" my bungalow for £229,950 in East Anglia in Q2 2010, but the buyer changed their mind and pulled out. I then sold it again in Q3 2011 for £225,000. So in 2011 the price I achieved was 2.15% less than in 2010, despite the Halifax index indicating that East Anglia showed the highest house price growth! At least the 2nd deal went through - (or should I say 4th deal as the first 3 offers I had didn't complete due to people not getting finance or chains collapsing!)

    Report on 27 December 2011  |  Love thisLove  0 loves
  • nickpike
    Love rating 308
    nickpike said

    What do you mean by 'best'? Saying at, or increasing on a price that is unaffordable to most.

    Houses are a human nest. But they are looked at now purely in financial terms. Most people cannot afford to buy a nest. Prices are totally dislocated from building cost.

    This is a dreadful situation.

    Report on 27 December 2011  |  Love thisLove  0 loves
  • supasap
    Love rating 19
    supasap said

    still no explanation of why they rose so much up to 2007 and why uk has been more or less protected from the crash that we've seen in Ireland Spain and USA - I have been amazed at how resilient the market has been, these falls are really mickey mouse falls compared to what happens sometimes to equities even blue chip ones

    Report on 27 December 2011  |  Love thisLove  0 loves
  • Tylerama20
    Love rating 4
    Tylerama20 said Report on 27 December 2011  |  Love thisLove  1 love
  • Burtonman
    Love rating 6
    Burtonman said

    It is true that property markets are local but they are even more local than your survey suggests. Wales should be divided into North Wales, Mid-Wales and South Wales. You will then find that the increase in North Wales is much more in line with the North west generally (i.e. about 2.5%), Mid-Wales shows a slight fall and South Wales is showing an increase of about 6%.

    Report on 27 December 2011  |  Love thisLove  0 loves
  • Luniversal
    Love rating 54
    Luniversal said

    Are these wishful asking prices, or do the indices reflect real deals as logged (longer after the event) by the Land Registry?

    Halifax is part of Lloyds, which is part of the Treasury's giant punt on bank shares recovering. A housing slump would upset vested interests all the way up to CallMeDave and Boy George, but politicians cannot always shore up the dam. I remember 1973's and 1988's crashes.

    Property is less liquid and fungible than financial assets. That means excesses correct themselves less quickly: a bricks-and-mortar bear market can grind on for years.

    None of those betting on a return to the good old days of steadily climbing values wants to admit that disinflationary forces in input prices, unemployment which curbs wage rises and squeezes living standards, the unwinding of quantitative easing and a possible take-off in interest rates-- even a little one, from a synthetic 300-year low-- could hit property with a perfect storm of adverse influences.

    What we know for sure is that so far in the financial crisis the establishment has strained every nerve (and beaten savers to a pulp) to shelter borrowers on residential property. But such iniquitous inequity cannot be sustained for ever. The longer it is, the more violent the break may be when it fails.

    Besides macroeconomic risks, there is a large overhang of supply, including frustrated would-be vendors who have become 'accidental landlords'; a new, yet unburst, bubble in Buy To Let; a suppressed danger from the unmasking of liar loans during the boom, which an interest rate increase would expose; and a granitic reluctance by banks to lend to first time buyers.

    I'd say the odds are on a fall in the prices of done deals, as this dreadful 2012 grinds on.

    Report on 01 January 2012  |  Love thisLove  1 love
  • krustallos
    Love rating 45
    krustallos said

    Just a small point regarding house prices in the South West, since my family lives there. What seems to have pushed house prices up there over the years is relatively wealthy people from elsewhere buying property as second or retirement homes, so the link between local incomes and house prices is perhaps less significant than in some areas.

    Perhaps the current fall in prices also has some connection with that market.

    Report on 02 January 2012  |  Love thisLove  0 loves

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