City house prices up 382% over past 25 years
With 26 towns applying for city status as part of this year's Diamond Jubilee celebrations, Halifax has looked back at how house prices in cities have performed over the past 25 years.
City House Prices on the Up
House prices in cities have risen by an average of 382% over the past quarter of a century from £35,209 in 1986 to £169,707 in 2011. This exceeds the increase of 347% for the UK as a whole over the period. Truro (550%), Westminster (522%) and Edinburgh (509%) are the three cities that have recorded the biggest price rises since 1986.
Majority of Cities Outperform their Region
The research also shows that the majority of cities outperformed their region in terms of house price growth between 1986 and 2011. Nearly 70% - 40 of the 59 cities surveyed - recorded average house price increases above their region's average over the period.
Brighton & Hove is the city to have outperformed its region by the biggest margin; recording a 500% increase in average house prices since 1986 - 180 percentage points higher than the 320% rise for the South East as a whole. Truro and Edinburgh have seen the next biggest gains relative to their region.
Cities fare best since the 2007 downturn
Cities have done particularly well in relative terms in the four years since the housing market peaked in 2007. Three-quarters of cities recorded a better house price performance than their region between 2007 and 2011. House prices in cities have fallen by an average of 18% since 2007 compared with the UK average decline of 24%.
Eleven towns have become cities in the past 25 years. On average, these new cities have seen house prices increase by an average of 379% since 1986. This is slightly below the average rise for all those places that have been cities throughout the last 25 years (384%), but is above the 347% increase for the UK as a whole.
Five of the eight new cities analysed - Inverness, Brighton & Hove, Wolverhampton, Sunderland and Preston - have seen prices rise by more than their region's average since 1986. The other three - Newport, Stirling and Lisburn - have experienced smaller price rises.
All three towns that became cities in 2000 - Brighton & Hove, Inverness and Wolverhampton - have recorded stronger house price growth than their region since becoming cities. By contrast, Brighton & Hove was the only one of these three towns that had outperformed its region in the decade prior to becoming a city.
Golden Jubilee Cities
The experience of those towns that became cities in 2002 to coincide with the Queen's Golden Jubilee has been more mixed. Only Newport has recorded stronger price growth than its region since 2002 whilst Preston, Stirling and Lisburn have all underperformed relative to their region. During the decade prior to 2002 both Stirling and Lisburn outperformed their region.
Diamond Jubilee City?
The 26 towns that have applied for city status this year have, on average, not experienced as rapid house price growth over the last 25 years as existing cities. Prices in these towns have increased by an average 345% - close to the UK average of 347% - compared with 382% for cities. Only four of the 25 applicant towns analysed - Goole, Dorchester, Doncaster and St Austell - have recorded a house price increase in excess of the average for all existing cities.
Martin Ellis, housing economist at Halifax, commented:
"Cities have typically seen higher house price growth than the UK average over the past 25 years. The majority of cities have also outperformed their region. City house prices are generally supported by demand from those looking to gain from the economic and lifestyle benefits often associated with residing in major urban areas.
The experience of towns that have been made cities during the past quarter of a century 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. There are, therefore, no guarantees for homeowners in whichever town is awarded city status this year that they will see a benefit in the form of improved house price performance."