House prices in cities have increased by more than the UK as a whole over the past decade, according to new research from Halifax.
Prices in cities increased by an average of 38% from £125,276 in 2002 to £173,322 in 2012. This exceeded the 29% rise for the UK as a whole.
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.
Halifax said 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 decade. In addition, average prices in Bradford and Hull are relatively low – both are amongst 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.
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. 11 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 nine new cities analysed have outperformed their regions over the decade: Newport, Stirling and Lisburn are the exceptions.
Martin Ellis, housing economist at Halifax, said: “Cities have typically recorded higher house price growth than the UK average over the past 10 years. 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.”
