House prices remain below pre-recession levels across a quarter of the UK

24 July 2017

By Richard Snook

The general perception of a UK wide affordability crisis masks huge differences in house price performance between regions. In a recent analysis of sub-regional data, we find that in a quarter of local authorities across the UK, house prices remain below the pre-recession peak achieved ten years previously.

These local authorities are clustered in Northern Ireland, Wales, Scotland, and in the North of England. In contrast, no local authorities in the South East, South West, Eastern or London regions have average house prices that are still below their pre-recession peak levels (see chart below).

The local authorities which have experienced the greatest falls in house prices since 2007 are all based in Northern Ireland, where on average house prices remain 44% below peak levels. The North East also records weak house price performance, with Hartlepool experiencing the greatest price decline of any English authority at -21%.

This means that affordability has improved in many of these areas. In Blackpool, for example, the average house price to earnings ratio has fallen from 6.2 in 2006 to 4.9 in 2016.[1] Similarly, Sunderland has seen a decline in this ratio from 5.4 in 2006 to 4.7 in 2016. This is in contrast to England as a whole, where the house price to earnings ratio has risen from 7.0 in 2006 to 7.7 in 2016.

These regions are also the ones where we are projecting prices to grow by the least up to 2025 – meaning the affordability gap between them and high growth areas like the South East will continue to grow.

Areas where house prices are lower than 10 years ago

Ukeohousingblog2

Areas experiencing the greatest house price declines (2007 – 2017)

Region

Local Authority

Price change relative to pre-recession peak

Northern Ireland

All local authorities in Northern Ireland

Declines vary from -47% in Armagh Banbridge and Craigavon to-39% in Derry and Strabane

North East

Hartlepool

-21%

North East

County Durham

-19%

North West

Burnley

-19%

Scotland

Inverclyde

-19%

North West

Blackpool

-18%

Scotland

East Ayrshire

-17%

Scotland

North Ayrshire

-17%

North West

Hyndburn

-14%

Scotland

West Dunbartonshire

-13%

North East

Sunderland

-13%

Source: ONS/Land Registry, PwC Analysis

[1] ONS (2017), ‘Ratio of house price to residence-based earnings (lower quartile and median), 2002 to 2016’

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