House prices in Inverness have risen by more than any other UK city over the past decade, according to new Bank of Scotland research.
The average house price in Inverness, awarded city status in 2000 to mark the new millennium, has risen from £68,141 in 2001 to £169,257 in 2011, an increase of £101,116 or 148%.
Scotland accounts for nearly half of the UK’s top performing cities. Four of the 10 UK cities that recorded the highest rises in house prices over the last ten years are in Scotland. Inverness was up 148%, Aberdeen up 116%, Dundee up 106% and Edinburgh up 93%. After Inverness, Truro in Cornwall saw the second biggest increase at 121%, followed by Hull at 119%.
House prices in Scottish cities have, on average, doubled since 2001. The average house price across the six Scottish cities rose by 102% or £80,170 over the past decade, moving from £78,913 in August 2001 to £159,083 in August 2011, equivalent to a weekly increase of £154. House prices across Scotland as a whole increased by 89% over the same period.
The average house price across all the tracked UK cities rose by 65% over the ten years to August 2011.
House prices in cities across Scotland are, on average, 12% or £15,157 higher than their county average, greater than the premium for city living across the UK which is 7%. Edinburgh has the largest premium in Scotland with houses trading at 41% above its county average.
The research also shows that city homes have fared better during the downturn. House prices in city locations in Scotland experienced smaller house price falls. City property prices fell, on average, by 8% between 2007 and 2009, lower than the overall fall of 12% across Scotland. Over the past year, city house prices have been broadly flat, compared to a 3.3% drop in the average Scottish house price.
Edinburgh is the most expensive city in Scotland and the twelfth most costly UK city with an average house price of £206,303. In contrast, Dundee is the least expensive Scottish city with an average property price of £123,711.
Across the UK, Westminster is the most expensive UK city with an average house price of £570,964. Salford in Manchester is the least expensive city with an average price of £105,833.
However, affordability in cities has declined over the last 10 years. The typical city home in Scotland is 4.8 times average gross annual earnings in 2011, up from an average multiple of 3.5 in 2001, demonstrating how prices have risen more rapidly than earnings. There has, however, been a recent improvement in affordability with the average price to earnings ratio falling from a peak of 6.3 in 2007.
‘With the housing demand and supply imbalance that characterises the Scottish property market often more acute within our major urban conurbations, homes in cities across the country are typically trading at a marked premium over neighbouring areas,’ said Suren Thiru, housing economist at Bank of Scotland.
‘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, as well as by the pressures on the housing supply that often typify such locations,’ Thiru added.