Given some of the media reports you might have seen recently, you could be forgiven for thinking house prices are booming all over the country, creating a dangerous property bubble which threatens to pop and take the economy down with it.
However, as with most things in life, the truth is more complicated that it at first appears.
While London and other parts of the south have been experiencing strong price growth, and in some cases prices now exceed those of the previous ‘bubble’ which burst in 2007, it’s certainly not true of all regions.
London property up, but other areas play catch up
Most of the main property indicators now show the average price of a home in the capital close to or above £500,000.
This is an astonishing 30% above the 2007 peak, according to Land Registry figures. Perhaps even more astonishing, it’s also 76% above the trough of 2009, according to property developer and estate agent Savills, in a report itself based on Land Registry figures.
However the report suggests that the rest of the UK isn’t particularly close to being in bubble territory, and in some areas the opposite is true.
Even commuter belt still below 2007 peak
Those parts of the South East which are commutable from London have been rising reasonably over the last few years, with average growth of 5.9% over the last year.
But they still remain just under 1% below the 2007 peak. Having said that, some of the more desirable parts of the London commuter belt have fared well.
In Surrey and Kent, for example, prices are now up to 10% greater than the previous peak.
Rest of the UK lags London considerably
For the rest of the UK regions, the picture is of a market which, in general, has only begun to turn around in the last couple of years and lags London by a considerable margin.
Of course, within the regions there are micro-markets; cities such as Bristol, Bath, Edinburgh, Cambridge, Oxford and Exeter have been showing fairly large price increases, whereas other parts of the same region have not.
But looking at the South of England as a whole, prices might be up nearly 6% over the last year but they are still 11% down on the 2007 peak.
In other regions, while prices are currently showing signs of life, the average price of a home is still a lot lower than in 2007.
Still in a slump?
In South Wales and the Midlands, prices are still at least 20% below those seen in 2007.
Scotland has suffered particularly badly from price falls and the average cost of a property north of Hadrian’s Wall is still 22.5% below the 2007 peak, and only up 1% over the last year.
Figures from the Office for National Statistics (ONS) show that in Northern Ireland, the average price of a home is still remarkably nearly 50% below the peak.
Cheapest homes in England
ONS figures, which are for the same period as Savills report, also show that the North East is the English region with the cheapest house prices, averaging just £148,000.
And in the North West prices are not far above that, hovering at an average of around £165,000 for a home.
Are some areas good value for property?
While it’s true that real wages fell for a number of years during the deep recession of 2008 to 2011, they have recently started to recover.
And after taking inflation into account, it could be argued that in a good number of UK regions (again, accepting that within those regions there will be some clear price differentials depending on location) house prices are in fact reasonably affordable.
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