House prices in UK cities have risen by an average of 382% over the past quarter of a century from £35,209 in 1986 to £169,707 in 2011, research from the Halifax shows.
This exceeds the increase of 347% for the UK as a whole over the period, the Halifax Cities Review which tracks house price movements in 59 cities in the country also reveals.
Truro in Cornwall has seen the biggest rise at 550%, followed by the City of Westminster in London at 522% and Edinburgh at 509%.
The research also shows that the majority of cities outperformed their region in terms of house price growth between 1986 and 2011. Nearly 70%, that is 40 of the 59 cities surveyed, recorded average house price increases above their region’s average over the period.
Brighton and Hove is the city to have outperformed its region by the biggest margin, recording a 500% increase in average house prices since 1986, some 180% higher than the 320% rise for the South East as a whole. Truro and Edinburgh have seen the next biggest gains relative to their region.
Cities have done particularly well in relative terms in the four years since the housing market peaked in 2007. Three quarters of cities recorded a better house price performance than their region between 2007 and 2011. House prices in cities have fallen by an average of 18% since 2007 compared with the UK average decline of 24%.
Eleven towns have become cities in the past 25 years. On average, these new cities have seen house prices increase by an average of 379% since 1986. This is slightly below the average rise for all those places that have been cities throughout the last 25 years but is above the 347% increase for the UK as a whole.
Five of the eight new cities analysed, Inverness, Brighton and 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.
All three towns that became cities in 2000, Brighton and Hove, Inverness and Wolverhampton, have recorded stronger house price growth than their region since becoming cities. By contrast, Brighton and Hove was the only one of these three towns that had outperformed its region in the decade prior to becoming a city.
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 region. During the decade prior to 2002 both Stirling and Lisburn outperformed their region.
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%, close to the UK average of 347%, compared with 382% for cities. Only four of the 25 applicant towns analysed, Poole, Dorchester, Doncaster and St Austell, have recorded a house price increase in excess of the average for all existing cities.
‘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,’ said Martin Ellis, housing economist at Halifax.
‘The experience of towns that have been made cities during the past quarter of a century has been mixed. Some have gone on to outperform their region after gaining city status whereas they had underperformed previously. This, however, has not always been the case. There are, therefore, no guarantees for home owners in whichever town is awarded city status this year that they will see a benefit in the form of improved house price performance,’ he added.