House prices hold up in top performing economic areas
Homeowners in the most economically prosperous locations in the UK have seen the value of their property rise by almost £150,000 over a decade, according to new research by Halifax.
Based on Halifax's own data, the average house price in the ten local areas that recorded the biggest rise in economic activity in the UK between 1998 and 2008 (latest available) rose by 219%, or £146,984, from an average of £67,178 in 1998 to £214,162 in 2008.
House prices in more prosperous economic areas are significantly higher
The rise in house prices in the ten top performing economic locations - which includes Edinburgh, Liverpool, London, and Belfast - was more than a third higher (34%) than the £109,413 (195%) increase in the average house price in the ten areas with the smallest rises in economic activity, such as Coventry and Blackpool.
The average house price in the ten areas with the highest levels of economic activity in 2008 is 61% (£100,468) higher than the average in the ten locations with the lowest levels of activity.
House prices have fared better in the most economically resilient locations since 2008
House prices have proved more resilient during the market downturn in those locations that have recorded the smallest contractions in economic activity. Since 2008, house prices have fallen, on average, by almost a quarter (24%) in the ten local areas with the biggest falls in economic activity. This is almost double the average 13% decline in house prices in the ten areas that recorded the smallest falls in economic activity.
Southern economy and housing market has fared better since 2008
Seven of the ten local areas that have seen the smallest falls in economic activity over the last three years are in southern England. In contrast, all ten locations that have recorded the largest falls in economic activity are in the northern regions of the UK. Consistent with this, all four of the local areas that recording the smallest falls in house prices since 2008 are in the south - Wiltshire, Hampshire, Brighton and Hove and Southampton - and all nine of the areas with the biggest declines in house prices are in the north.
Inner East London sees biggest gain in economic activity and a 236% house price increase
Between 1998 and 2008, the biggest increase in the value of economic activity per person was in Inner East London (an area including Tower Hamlets, Hackney, and Canary Wharf), where activity increased by 87%. House prices here rose by 236% (£248,667) over the same period. Belfast recorded both the third biggest gain in economic activity (84%) and the largest rise in house prices (344%). In contrast, Thurrock, which saw the smallest rise in economic activity over the decade (23%), recorded a more modest, but still substantial, 196% rise in property prices.
...but mixed fortunes for previous top economic performers since 2008
Although a number of the top economic performing areas between 1998 and 2008 have seen house prices continue to hold up relatively well, a few of these locations have seen more substantial house price falls. For example, Belfast recorded both the third biggest gain in economic activity and the largest rise in house prices in the decade to 2008, but saw house prices fall by 46% over the next three years as the Northern Ireland capital recorded the second largest contraction in economic activity across the UK over the same period.
Suren Thiru, housing economist at Halifax, said: "Unsurprisingly, house price growth over the past decade has been stronger in the areas that have seen the biggest increases in economic activity. The North-South divide that has opened up recently with the general outperformance of the housing market in southern England appears to reflect the stronger economic performance of these regions."