House Price Growth Slows Across Most of the UK
- 7 out of 13 UK regions recorded annual price growth in Q1 - London remains top spot in terms of annual price growth - Northern Ireland continues to see largest price falls
(firmenpresse) - LONDON, UNITED KINGDOM -- (Marketwire) -- 03/30/12 --
Please note that these figures are for the three months to March, therefore will show a different UK average price and annual percentage change to our monthly house price report.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:
"Average house prices in the UK were essentially unchanged in the first quarter, after allowing for usual seasonal effects. The annual rate of change moderated from 1.1% to 0.2%.
"The North saw the strongest quarterly growth rate, with prices up 0.6% quarter-on-quarter. This pushed the annual rate of price change up from -1.0% to 0.8%.
"Apart from the North and the Outer South East, all of the English regions saw their annual rate of house price growth slow during the first quarter.
"House prices increased by 0.5% in Scotland during the quarter, which resulted in a slight improvement in the annual rate of change from -0.8% to -0.2%.
"Wales was the worst performing region on a quarterly basis, with a seasonally adjusted 3.1% fall. On an annual basis, prices were down 2.9% compared with Q1 2011.
"Northern Ireland recorded a third consecutive quarter of price declines. Average prices were down 8.6% year-on-year."
Comparing rents across the English regions
It's a well known fact that remain high relative to average incomes. At a national level, house prices are currently 5.1 times average earnings, lower than the peak of 6.4 times, but still above the long-term average of 4.1 times annual earnings. Recently released data from the Valuation Office Agency (VOA) provides a good opportunity to compare rental costs across the English regions.
The data indicates that there is considerable variation in private sector rents across England (see chart). The North is the least expensive, with an average monthly rent of GBP 475, whilst in London they are almost three times higher, at an average of c.GBP 1,300 per month.
Of course, rents are only one side of the affordability calculation. Average earnings are also important in assessing the relative costs of housing, and these also vary significantly by region.
As the chart below illustrates, the pattern of rental affordability shows a close correlation with house purchase affordability. The chart compares the house price to earnings ratio for (HPER) with average rents as a percentage of earnings.
The areas where house prices are high relative to earnings are also areas where rents are high relative to earnings.
London stands out as the least affordable English region, with rent taking up nearly 40% of earnings, and average house prices are more than six times earnings. More generally, households in the South of England spend a greater proportion of their income on housing than those in the North of England.
This is important as it provides further evidence that housing more generally is in short supply, reinforcing the idea that any efforts to reinvigorate the housing market should focus on the demand and the supply side of the market.
Regional Headlines
Prices are calculated on a mix adjusted basis
Scotland recorded a 0.5% seasonally adjusted increase in the first quarter, resulting in an improvement in the annual rate of change to -0.2%.
Dundee & Angus was the best performing area, with prices up 1% year-on-year. Perthshire & Stirling was the weakest performing area.
Wales was the worst performing UK region in Q1, with a -3.1% seasonally adjusted price decline. Consequently, the annual rate of change fell from +1.5% to -2.9%, making Wales the second weakest region on an annual basis, behind Northern Ireland.
Cardiff, the most expensive area in Wales, was also the strongest performing over the year. Mid & West Wales, which comprises Carmarthenshire, Ceredigion, Pembrokeshire and Powys, is the least expensive part of Wales and continued to see prices fall over the past twelve months.
House prices continue to fall in Northern Ireland, with prices in the first quarter of 2012 down 8.6% year-on-year. Average prices have fallen more than 50% from their peak in 2007, and are now similar to the levels prevailing in early 2005.
All areas saw price falls over the year, the largest being the City of Belfast, which saw a 15% year-on-year decline.
Annual house price growth in London moderated to 2.3% (from 5.4% in Q4 2011), although it remained the best performing UK region.
Hackney saw the strongest growth, with prices up 12% compared with last year. Brent was the weakest performing borough, with a 1% fall in average prices.
Average house prices in England fell slightly during the first quarter of the year, although they were still up 0.7% compared with the same period in 2011. London remained the best performing region, with a 2.3% annual increase. The majority of English regions have experienced small price rises over the past twelve months, with the exception of the West Midlands, Yorkshire & Humberside and the North West. The North West continues to be the worst performing English region, with prices down 2.2% compared with Q1 2011.
A north/south divide continues to persist, with annual price growth in southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) outpacing that of northern England (West Midlands, East Midlands, Yorkshire & Humberside, North West and North) for the twelfth consecutive quarter.
Amongst England's major towns and cities, Cambridge has seen the strongest price growth over the last twelve months, with prices up 13%. Carlisle remained the worst performing city, with prices falling 5% over the same period.
Major Towns and Cities
Sub Regional Analysis
Just as the national data disguises differences in house prices throughout the UK, looking at the regions disguises movements in local house prices. To look at these developments more closely the areas can be divided into sub-regions.
Notes
1. Indices and average prices for the UK and the regions are produced using Nationwide's updated mix adjusted House Price Methodology which was introduced with effect from the first quarter of 1995. All changes are nominal and do not allow for inflation. The methodology can be found on our website: .
2. Price indices are seasonally adjusted using the US Bureau of the Census X12 method. Quarterly series are seasonally adjusted using data since 1973. The seasonal adjustment is recalculated quarterly and may lead to revisions.
3. The price changes in the sub regional, local authority and major towns and cities tables are based on the price per unit area of the properties in the sample rather than the mix-adjusted methodology used for the 13 regions. The average price per square foot in each of the sub-regions is grossed up by the average square footage in a particular region to arrive at an average house price. Unlike Nationwide's main index, this methodology does not take into account the different mix of properties transacted and is therefore a simplification.
4. Sub-regional figures are therefore not directly comparable with regional prices. Samples are substantially smaller than at a regional level and figures should not be relied upon for any critical application. Due to greater volatility, sub-regional prices are smoothed over two quarters.
5. The Nationwide is prepared from information which we believe is collated with care, but no representation is made as to its accuracy or completeness. We reserve the right to vary our methodology and to edit or discontinue the whole or any part of the Index at any time, for regulatory or other reasons. Persons seeking to place reliance on the Index for their own or third party commercial purposes do so entirely at their own risk.
Photographs of our economist are available at: .
About Nationwide Building Society
Nationwide is the world's largest building society as well as the second largest savings provider and a top-three provider of in the UK. It is also a major provider of , , and . Nationwide has around 15 million members.
Since the credit crunch began in 2007, Nationwide has remained profitable against a very difficult economic environment. In the half year ending September 2011 Nationwide made a strong underlying profit of GBP 172 million - up 17% from the previous year. Its strong financial performance and prudent business model means that Nationwide is included in Global Finance magazine's Top 50 Safest Banks in the World.
Nationwide has around 700 branches and customers can manage their finances in branch, on the telephone, internet and post. The Society has around 16,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.
To view the charts associated with this release, please visit the following link: .
Contacts:
Media enquiries to:
Nationwide
Robert Gardner
Chief Economist
Nationwide
Stuart Williamson
01793 654756
Nationwide
Paul Beadle
01793 655189
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Datum: 30.03.2012 - 17:09 Uhr
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