The housing boom of the past decade has belatedly reached Britain’s far-flung corners this year with prices in parts of Scotland, Northern Ireland and Wales jumping by more than a quarter.
A new survey by Halifax, the UK’s biggest mortgage lender, showed that seven out of the 10 towns with the most rapid price rises in 2005 were north of the border. The highest climbers were Alexandria near Loch Lomond and Coatbridge, near Glasgow, both of which saw prices rise by 35 per cent.
This racing growth came in spite of a slowdown in the wider UK market, where average price rises struggled to surpass the rate of inflation during the year.
According to the latest FT house price index, the most reliable measure of the market, prices are set to finish the year 2 per cent to 3 per cent higher compared with consumer price inflation of 2.1 per cent.
In most of England, estate agents have been urging over-optimistic sellers to cut asking prices to get a deal. Yet parts of Scotland, Wales and northern Ireland have seen continued rises. “This is the same as it has been for 20 years or more, the boom always starts in London and is followed several years later by the rest of the country,” said Ivor Dickinson, head of Douglas & Gordon, the estate agents.
Most of the towns on the Halifax list are far from prosperous; 12 out of the 20 began the year with an average house price below £100,000. In spite of the rapid rises in Scotland, it still has 10 of the 20 cheapest towns in the UK – reflecting its late entry into the housing boom.
By contrast, all of the most expensive 20 towns in the country are in southern England – the most expensive is Gerrards Cross in Buckinghamshire, followed by Weybridge, Henley on Thames, Richmond, Sevenoaks and Ascot. House price rises began in the mid-1990s in the south and only ran out of steam a year ago.
Martin Ellis, chief economist at Halifax, said parts of southern England had seen substantial price falls in the past year. A survey this week by Hometrack suggested prices had fallen 7 per cent in Milton Keynes and 6 per cent in Lincoln since January.
Halifax predicted a subdued 2006 with UK prices edging ahead by just 3 per cent, below expected wage growth of 4.5 per cent. This is in line with most market commentators. It would help the house price-to-earnings ratio ease back from a peak of 5.6 in mid-2004 to 5.4 by the end of next year, said Mr Ellis, making it slightly easier for first-time buyers to get on the property ladder.
Mr Ellis also predicted that the spiralling prices in the Celtic fringes were set to lose momentum next year. He suggested house price inflation would fall from 16 per cent to 5 per cent in Northern Ireland, 14 per cent to 3 per cent in Wales and 10 per cent to 7 per cent in Scotland.