uk Property Story

UK House Prices Soar
29/10/2006 07:51 AM
Jennifer Hill
Property prices have soared at more than three times the rate of stock market returns in the past decade, figures showed.

House prices have surged 187 percent since the market recovered in February 1996, while stock prices rose 61 percent over the same period, data from Halifax revealed.

The increase in earnings and rate of inflation were even more modest. Nominal earnings rose by 54 percent and retail prices increased 31 percent.

Property values have tripled in three regions: London house prices have soared by 240 percent, Northern Ireland by 231 percent and south-west England by 213 percent.

“The premium for living in London has increased over the last ten years, as the average property price in the capital has more than tripled,” said Tim Crawford, group economist at Halifax, Britain’s largest mortgage lender.

On an annual basis, UK property prices have increased by 10.6 percent, outstripping a 4.6 percent rise in equities, a 4.2 percent lift in earnings and a 2.6 percent increase in retail prices.

The average house price stood at 179,425 pounds in the third quarter of 2006, up from just 62,453 pounds in the first quarter of 1996.

Crawford said the south-west had emerged as a highly sought after destination, led by Cornwall. It ranked as the top-performing county since February 1996, with a 274 percent rise in house prices, equivalent to 13.3 percent per year.

In Northern Ireland, Newry and Antrim led the property price boom, making it into the top five towns.

The smallest increase in house prices in the past decade has been in Scotland. Property vales have risen 110 percent north of the Border, or 7.3 percent per annum.

However, Scotland experienced a rise in house prices during the downturn of the early 1990s.

Between the second quarter of 1989 and the first quarter of 1996, Scottish house price rose by 25 percent, compared to an 11 percent tumble across the UK.

The early 1990s housing market downturn was triggered by steep increases in both interest rates and unemployment – neither of which is in prospect for the UK economy, it said.

Halifax said sound fundamentals underpinned the housing market, although price increases seen in the past decade were unlikely to be repeated because of affordability constraints.

The figures are sourced from the Halifax house price index, which dates back to January 1983.

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