The best and worst areas to buy property

by Cliff D'Arcy on 14 December 2009  |  17 comments
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Cliff D'Arcy examines 26 years of house-price data to show you which parts of the UK produce the biggest rises in house prices...

Whether property prices are rising (as they did from 1995 to 2007) or falling (as they did from August 2007 to this spring), there seems to be no more popular topic here in the UK. So I've been picking through what is probably the most well-known housing gauge: the Halifax house price indexf. This includes data all the way back to 1983, so it gives us a 26½-year look in the mirror for house prices.

Today, I crunched the numbers in order to find out which regions of the UK have recorded the highest increases in residential property prices since the HHPI began. Here's what I found:

House prices in the United Kingdom

The Halifax index divides up the UK into twelve regions, but let's begin with the results for the nation as a whole:

As you can see, the price of the average UK property climbed from under £30,000 to over £161,000 from 1983 to 2009. In fact, the average increase over these 26½ years was 438%, or a compound yearly increase of 6.6% a year. Thus, the double-digit rises in the Noughties were well above this longer-term average, putting us firmly into bubble territory.

Now let's take a look at each of the UK's dozen regions (ranked highest to lowest based on percentage increase in house prices):

House prices in Greater London

As one of the wealthiest parts of Europe, London is our outright winner, both for high house prices and superior house-price growth. No surprises there, then. Look at the difference over the past 26½ years: an increase of over £207,000 per property. Wow!

House prices in Northern Ireland

Northern Ireland sneaks into second place, with prices more than six times what they were in 1983. This 7%-a-year rise is partly due to the 'peace dividend' which resulted from the cessation of Anglo-Irish hostilities in the Nineties.

House prices in South East

Where London goes, the South East follows. Southerners have enjoyed 6.7%-a-year house-price rises since 1983 -- an increase of close to £178,000 per property.

House prices in South West

As a popular tourist destination, the South West has done well since 1983, slightly beating the UK average rise (6.62% versus 6.55% a year).

House prices in the West Midlands

The West Midlands -- one of the UK's industrial heartlands -- also beat the average for the UK as a whole, but not by much (a mere 0.03% a year, in fact).

House prices in East Anglia

I remember house prices exploding in East Anglia during the Eighties boom. Alas, they fell back very steeply in the Nineties crash and, today, have grown at a rate fractionally short of the average rate for the UK as a whole.

House prices in East Midlands

After East Anglia is the East Midlands which, again, has seen house-price growth just behind the UK's. Note that house prices remain low in this area when compared to more affluent southern regions.

House prices in Wales

Wales saw house prices rise by a slightly below-average 6.5% a year since 1983.

House prices in Yorkshire & Humberside

Yorkshire folk have a well-earned reputation for financial prudence. This manifests itself in a slightly below-average rise in house prices (plus lower house prices in general). Also, Yorkshire & Humberside has seen the lowest absolute increase in house prices: a rise since 1983 of below £96,000.

House prices in the North

Despite lower incomes and huge job destruction during this period, the North recorded a respectable but below-par rise of 6.4% a year in house prices over the past 26½ years.

House prices in the North West

Although it has some affluent areas (such as parts of Cheshire), the North West is dominated big cities such as Liverpool and Manchester. Overall, house prices have climbed by 6.4% a year since Q1 1983.

House prices in Scotland

As you can see, Scotland is the UK's poor relation, with lower typical house prices and slower house-price growth since 1983. Indeed, Scotland is the only part of the UK with yearly house-price growth below 6% over this period.

And finally...

It's important to note that my analysis shows only house-price growth across the 12 different regions of the UK. Local variations will be huge, as the poor often rub shoulders with the rich -- particularly in big cities. Also, it doesn't give a full picture of property as an investment, since it doesn't take into account rental income and property-related expenses.

Finally, there has long been a perception of a north-south housing divide. In other words, the further south you go in the UK, the higher the house prices and the faster the house-price growth. The data above tend to reinforce, rather than refute, this rule of thumb!

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