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

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

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

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

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

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

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

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

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

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

5. Yorkshire and the Humber

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

6. East Midlands

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

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

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!

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