We’ve long argued that UK house prices are too high. Despite the crash of 2008/09, it seems that prices have yet to fall back to any sort of affordable rate, if you look at the national data.
However, with housing sales way down, and mortgage lending tight, it’s clear that some parts of the country have seen prices hold up better than others.
Bail-out money for banks, and an influx of rich Europeans looking for a ‘safe’ haven, has seen prices recover sharply in London (although these things can’t last forever, as my colleague John Stepek pointed out recently: The biggest threat to UK house prices - a eurozone recovery).
In other areas of the UK, things have been a little different. In some, house prices have crashed, and then pretty much stayed there. And in Northern Ireland, prices have just kept on falling.
Here we take a look at how each region has performed, using data from the Nationwide (not seasonally adjusted). We’ve listed the regions in order of strength of recovery – London comes top, with prices barely off their 2007 peak, while Northern Ireland is at the bottom.
Obviously, these figures are not perfect by any manner of means. You could subdivide each region into smaller regions. And Nationwide is not the only source of data on prices. However, we think this breakdown gives a slightly better view of just how big a gap there is between the state of the housing market in the south of England and that of many other parts of the UK.
London has had the strongest recovery, perhaps unsurprisingly. The average house price fell from £303,739 in the fourth quarter of 2007, to £242,678 by the start of 2009.
However, since then London prices have made an almost complete recover, due largely to an influx of money from those fleeing the fallout from the euro crisis. According to the latest data (Q2 2012), the average price is £302,399 – just below the peak. (It’s worth noting that other data focused on prime property, suggests that for the very wealthiest buyers, prices have set new records).
Peak to trough fall: 20.1%
Current level compared with peak: -0.4%
The Outer Metropolitan area
The Outer Metropolitan area (for example, places like South Essex and Luton) has followed in the footsteps of the London market. Although the average price fell by nearly 20% from the Q4 2007 peak of £259,160, to £209,667 in Q1 2009, it has since recovered. Currently the average price is just 3.7% from the peak. Given that many people in this region commute to the capital, this should not be surprising.
Peak to trough fall: 19.1%
Current level compared with peak: -3.7%
Outer South East
The knock-on effect of the recovery in London property prices has helped cushion the blow for the Outer South East, though to a lesser extent than the Outer Metropolitan area. The average house price now is £198,112, 8% down from the peak of £213,575 in Q3 2007.
Peak to trough fall: 20.0%
Current level compared with peak: -8.0%
The South West has also done relatively well. After a peak to trough fall in price from £204,447 to £167,4700, the average house now costs £186,172, 8.9% below its peak.
Peak to trough fall: 18.1%
Current level compared with peak: -8.9%
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House prices were hit particularly badly in East Anglia. Indeed, the 21.7% fall from the peak average price of £183,815, to a trough of £143,987 was the largest drop on the UK mainland. However, the recovery has been strong, which means that the average price is now £166,527, less than 10% off the peak.
Peak to trough fall: 21.7%
Current level compared with peak: -9.4%
The average property price in the East Midlands also fell sharply, dropping from £156,924 in Q3 2007 to £126,673 in Q1 2009. Since then, the price has rallied to £134,278.
Peak to trough fall: 19.3%
Current level compared with peak: -10.6%
Scotland had the mildest price crash in the whole of the UK, according to Nationwide. The average house price fell by just 14.1%, from a peak £152,479 in Q3 2007 to £130,975 in Q1 2009.
However, the recovery has been more muted. The average price has only recovered to £136,182, which means it is still more than 10% below its peak.
Peak to trough fall: 14.1%
Current level compared with peak: -10.7%
The average price fell from £165,094 in Q3 2007 to £136,166 at the start of 2009. At £147,089, the average price remains 10.9% below its peak.
Peak to trough fall: 17.5%
Current level compared with peak: -10.9%
Yorkshire and Humberside
The average price fell from £156,429 in Q3 2007, to £127,412 at the start of 2009. While it has gone up since, it is still 14.1% below its peak, at £124,362.
Peak to trough fall: 18.5%
Current level compared with peak: -14.1%
While the average price in the North collapsed by less than those in many other regions, it has barely recovered since. Indeed, the current average price of £114,882 is barely above the Q2 2009 trough of £112,348.
Peak to trough fall: 16.5%
Current level compared with peak: -14.6%
The average house price in Wales peaked earlier than any other part of the UK, hitting a high of £154,969 in Q2 2007. While there was a temporary recovery at the end of 2007, the average price ended up falling to £123,990 in Q1 2009. Currently it sits at £131,840 – 15.2% below the peak.
Peak to trough fall: 20%
Current level compared with peak: -14.9%
Of all the regions in England and Wales, house prices in the North West seem to have had the weakest recovery. The average price reached £159,062 in Q4 2007, then fell 17.9% to £130,572 in Q1 2009. Yet more than three years later, the average house still only fetches £134,905.
Peak to trough fall: 17.9%
Current level compared with peak: -15.2%
As we noted above, Northern Irish house prices have collapsed – more than halving from a peak of £227,970 in Q3 2007. While there was a rally at the end of 2009, the average price then fell further to £109,562 in the first quarter of this year.
This is probably mostly due to the knock-on effect from the house price crash in Ireland, where house prices have also tanked. The latest figures show a small increase in average price to £110,422, though it remains to be seen whether the bottom has genuinely been reached.
Peak to trough fall: 51.9%
Current level compared with peak: -51.6%
Do these figures tie in with your own experience? Give us your thoughts in the comments section below.
Tim Bennett looks at some of the most popular house price surveys and explains the differences between them, how they work, and how useful they are as a guide to house prices.
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