According to Nationwide there is one city in Britain where house prices have doubled over the past decade, and, surprising as it might sound, it isn’t London.
That city is Aberdeen, where the North Sea oil industry has created a micro-economy which is vastly different from the rest of the UK economy. The average house price in Aberdeen City is £221,079, 112% higher than ten years ago, and about the same as some suburbs of London.
It underlines the fact that simple broad-brush statements about the housing market simply don’t work.
There has and there hasn’t been a housing crash in Britain – it all depends on where you live. Even in London (usually assumed to be in the midst of an incontrovertible boom) there are postcodes which have suffered price falls (Greenwich, for instance, has seen prices fall 11% in the past year, according to Nationwide).
If there is a pattern, it goes back to the divide between rich and poor. House prices have risen in the more salubrious areas; they have fallen in the less desirable areas – whether you’re talking about distinctions within London or about the UK as a whole. In fact, the divide is probably bigger than what’s reflected in the Nationwide figures, since its figures are based on mortgage completions, whereas many of the most wealthy buyers in the UK – non-residents and overseas investors in particular – are not borrowing to buy.
However, there’s another piece of news out today which suggests that perhaps this gap might be about to narrow.
The Bank of England’s Credit Conditions Report shows a sharp rise in the availability of credit to borrowers – particularly those wanting to borrow at high loan-to-value ratios. It’s typically these borrowers – the over-stretched – who will be buying homes at the lower end of the price spectrum.
So perhaps there is some hope yet that the great house price divide may soon start to narrow.