With 26 towns in the UK – including Perth and Dumfries – applying for city status as part of this year’s Diamond Jubilee celebrations, Bank of Scotland has looked back at how house prices in cities have performed over the past 25 years.
Truro (550 per cent), Westminster (522 per cent) and Edinburgh (509 per cent) are the three cities that have recorded the biggest price rises since 1986. House prices in UK cities have risen by an average of 382 per cent over the past quarter of a century from £35,209 in 1986 to £169,707 in 2011. This exceeds the increase of 347 per cent for the UK as a whole over the period.
Both Edinburgh and Inverness (450 per cent) feature amongst the 10 best performing UK cities since 1986.
Majority of Cities Outperform their Region
The research also shows that the majority of UK cities outperformed their region in terms of house price growth between 1986 and 2011. Nearly 70 per cent – 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 per cent increase in average house prices since 1986 – 180 percentage points higher than the 320 per cent rise for the South East as a whole. Truro and Edinburgh have seen the next biggest gains relative to their region.
The picture in Scotland is similar with four of the six cities – Edinburgh, Inverness, Aberdeen and Dundee – all outperforming the Scottish average. Glasgow and Stirling, however, have seen average prices rise more slowly than for Scotland as a whole.
New Cities
11 towns – including Inverness and Stirling – have become cities in the past 25 years. On average, these new cities have seen house prices increase by an average of 379 per cent since 1986. This is slightly below the average rise for all those places that have been cities throughout the last 25 years (384 per cent), but is above the 347 per cent increase for the UK as a whole.
Five of the eight new cities analysed1 – 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.
Millennium Cities
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 region2. 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 per cent – close to the UK average of 347 per cent – compared with 382 per cent 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.
The two Scottish applicants – Perth and Dumfries – have seen prices rise by 372 per cent and 346 per cent respectively since 1986, above the average for all applicant towns of 345 per cent.
Nitesh Patel, housing economist at Bank of Scotland, commented: “Cities have typically seen higher house price growth than the UK average over the past 25 years. The majority of UK 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 performance of cities in Scotland has been similar with four of the six cities outperforming the Scottish average. Edinburgh and Inverness have seen very strong house price growth, both featuring in the top ten UK cities since 1986. Glasgow and Stirling, however, have seen average prices rise more slowly than for Scotland as a whole. There are, therefore, no guarantees that city status benefits its population’s homeowners.”
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