When Nationwide released its house price figures this week revealing a dip of 2.5 per cent in May, there were plenty of groans but also some caveats. One of these was that the picture is the subject of much regional variation.
Such a point was made by the National Association of Estate Agents (NAEA), whose chief executive Peter Bolton King said: "The national sales figures do not tell the whole story. We know from our members that the picture is still very regional with some areas continuing to do better than others."
Notwithstanding the fact that it does not include Scotland and is a month behind, the Land registry figures for England and Wales released today appear to justify this contention. Overall the dip in prices in April was small at 0.2 per cent, while the annual figure is still one of an increase, albeit 2.7 per cent compared with 3.6 per cent in March. But when the region-by-region breakdown is given, a picture of variance emerges. Of the ten regions, five saw increases in prices and
five saw falls.
Those that fell included the usual suspects of Wales and the two midlands regions. But it also showed a drop in London of 0.5 per cent, a contrast with the neighbouring south-east's position as the region with the largest increase at 0.5 per cent and a possible indicator of the peculiar effect on the capital of the hit taken by the financial sector in the credit crunch.
Perhaps just as significant is the position of the north-east as the region with the second highest rise at 0.4 per cent, possibly indicating that the 2.4 per cent surge in prices recorded in March was not quite the blip some may have considered it. Given that the average house price in the region - £131,796 - is lower than the other nine, it may be that those investing in property either for residential or rental purposes are attracted by the lower cost at a time when finance for purchases is harder to get.
At the same time, this may be part of a longer-term trend, in the same way that Scottish prices have risen strongly from a low base in recent years. One example of this in the region may be Seaham, a small town in County Durham on the North Sea Coast. Research by HBOS based on Land Registry figures published this week revealed that it was the seaside town with the highest long-term increases over the five years between 2002 and 2007, at 193 per cent. Despite this, the average price there at the end of the period was still £126,348, well below the national average even if it was above the county average (which according to the Land Registry now stands at £118,974).
The experience of Wales, the second cheapest region, suggests that having a low price base does not guarantee increases in price. But it may be that where this has been happening investors can find the bargains with the most potential to go on rising in value no matter what other regions are doing. An analysis based on how each region, area or even town is doing may have plenty of merit in these uncertain times.
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Property investment is an excellent investment option especially
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