UK Regional House Price Growth Sags In The Middle
Housing-Market / UK Housing Oct 04, 2007 - 08:05 PM GMTBy: Nationwide
Weakest annual house price growth recorded in the Midlands- Strong performance in London continues to widen the North-South gap
- Average house price in London breaks £300,000 barrier
- House price forecasts remain on track in most UK regions
- London first-time buyers won’t benefit from £250,000 stamp duty threshold
Average house price: £184,131
Annual percentage increase: 9.3%
Quarterly change (seasonally adjusted): 1.6%
Most expensive region: London
Least expensive region: North
Region with strongest price growth: Northern Ireland
Region with weakest price growth: West Midlands
| Quarterly index - Headlines | Q3 2007 | Q2 2007 |
|---|---|---|
| Average price in quarter | £184,131 | £181,810 |
| Annual change | 9.3% | 10.2% |
| Quarterly change (seasonally adjusted) | 1.6% | 1.9% |
Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said: The rate of house price growth in the UK cooled from 10.2% to 9.3% in the third quarter. Evidence of this cooling was supported further by regional data which showed the annual rate of house price growth slowed in nine out of Nationwide’s thirteen regions. Northern Ireland topped the rankings of fastest house price inflation for the 10th consecutive quarter. Prices increased at an annual rate of 42.6% in the third quarter, but Northern Ireland was also the region to see the largest slowdown in house price growth, moderating from a staggering 54% in the second quarter.
London saw the second fastest rate of growth in the UK at 16.5%, followed by Scotland at 12.2% and then the capital’s immediate neighbours of Outer Metropolitan and Outer South East at 11% and 10.1% respectively. London also saw the average house price increase above £300,000 for the first time. The East and West Midlands regions came at the bottom of the house price growth rankings in the second quarter, with prices growing at around half the UK average, at annual rates of 4.8% and 4.6% respectively.
During the last quarter the pace of UK house price growth also slowed. Between June and September the quarter on quarter rate of price growth slowed from 1.9% to 1.6%, making this the third consecutive quarter of slowing inflation. However the regional breakdown shows a slightly more mixed picture. Wales experienced a fall in prices, the only part of the UK to do so. Prices in Wales fell by 0.3% during the third quarter, although this is likely to reflect something of a correction of its particularly strong performance in Q2. Only Yorkshire and Humberside saw any significant acceleration in prices during the third quarter, with price inflation doubling from 0.7% to 1.4%. Most of the remaining regions saw price growth cool compared with the previous quarter.
In England, the North-South gap remains, but the slowest region as far as annual house price growth is concerned is the Midlands. House prices in the North of England1 as a whole increased by 5.2% over the last 12 months, less than half of the 12% rate achieved in the South. But in the Midlands, prices increased by only 4.7% over the year. The East and West Midlands also saw the slowest rate of house price growth in England over the last three months. Prices increased by only 0.2% in each of these regions compared with an average for the UK of 1.6%.
London again saw the fastest annual pace of price growth in England by a considerable margin. The capital has outperformed the annual average for England for nine consecutive quarters and the gap over the period has widened from 0.4 percentage points to 7.1. However, while London saw the fastest annual and quarterly rate of growth in the third quarter, the pace of quarterly growth remained static at the second quarter level of 3.4%. The price of a typical first-time buyer property in London has increased to more than £260,000, putting these first-time buyers beyond the Shadow Chancellor’s proposed exemption limit for stamp duty.
The speed of house price growth in Northern Ireland remains astonishing, but the moderation in growth this quarter is a welcome sign and confirms our view that the market peaked in the first quarter of the year. Over the past twelve months, prices in Northern Ireland have risen by 42.6%, 11.4 percentage points lower than in the second quarter. But even with this sharp cooling the annual rate of growth still appears unsustainable, and we would expect to see significant further cooling during the rest of the year. The price of a typical house in Northern Ireland is now almost £228,000, with only London and the Outer Metropolitan regions more expensive.
Scotland also maintained a strong performance in the third quarter, with prices increasing at an annual rate of 12.2%. This is the third fastest annual rate of growth in the UK behind Northern Ireland and London and the sixth consecutive quarter of double digit growth. However, Scotland’s market also is beginning to cool. The annual rate of growth has fallen consistently during 2007 and is now 2.5 percentage points lower than last quarter. The pace of growth during the last three months also slowed, dropping from 2.9% to 2.5%. Even after the robust growth seen over the last year, Scotland is still one of the least expensive markets in the UK. The price of a typical house in Scotland is £152,479, only ahead of the North of England at £134,534.
The annual rate of house price inflation in Wales was one of the weakest in the UK at 5.5% - a significant reduction from the 7.4% achieved in the second quarter and reflecting a 0.3% fall in prices between the second and third quarters. However, this fall is likely to represent a correction of its particularly strong performance in Q2 rather than an indication of a unique weakness in the Welsh market. A typical property in Wales is now worth just under £154,000.
Looking forward to the rest of the year, most of Nationwide’s regional forecasts still appear on track, with the exception of Northern Ireland, London and the Northern Region, all of which have outperformed expectations so far this year.
For further information please see this quarter's full report (PDF - 94KB)
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