Bucking the trend

House prices may have fallen in most areas, but some pockets of the UK remain defiant. Barney McCarthy looks at the resilient regions

After several years of phenomenal growth, house prices in the UK have hit the rocks recently, with the majority of areas registering monthly falls for most of this year. But the picture isn’t all doom and gloom for all areas, or indeed all consumers in the UK. After all, if you are a buyer with a large enough deposit and are able to secure a mortgage, you could take advantage of slightly lower prices, depending on the area in which you want to buy.

Flying the flag

Nationwide’s House Price Index for the first half of 2008 revealed that house prices are lower now than they were a year earlier in 12 out of 13 UK regions. The sole steady market was Scotland, where prices are 0.6% higher than a year ago. Fionnuala Earley, Nationwide’s chief economist, says: “Scottish house prices have already proved more resilient than prices in other UK regions during the first quarter and this trend has been sustained in the most recent quarter. On most measures of housing affordability Scotland compares quite favourably with other UK regions and this is likely to be the main reason why the correction in prices has been less drastic than elsewhere.”

Jill Burns, assistant property shop manager at Inverness-based estate agent Munro & Noble, says: “Prices in Scotland are still lower than the rest of the UK, so growth has been more stable. People still think they are picking up a bargain, particularly if they are moving into the area from somewhere else. In terms of our business, prices have remained the same, it’s just that properties are taking longer to sell.”

Margaret Sutherland, property manageress at Innes & Mackay, also in Inverness, says: “It is definitely a buyer’s market at the moment. We have 50% more properties on our books than this time last year, but it simply means there is more choice. House price growth in Scotland has always been steady and I expect it to remain stable.”

However, while the Scottish housing market has shown admirable resilience up until now, it too is starting to show the cracks evident around the rest of the UK. Despite marginal annual growth, prices have dipped slightly in the last two quarters.

Fighting the falls

It is not just Scotland that is digging its heels in as house prices slide. Nationwide’s research also highlights the ‘hottest’ towns and cities. The top five is made up of Cambridge, Canterbury, Oxford, Carlisle and Aberdeen. It is difficult to establish a geographical pattern here, but one interesting observation is that they are all home to universities. With thousands of students looking for accommodation, property investors clamouring for digs to let may have helped house prices defy national patterns.

Other factors can also contribute to individual towns bucking the trend. Halifax published research last week showing how two-thirds of market towns have a higher average house price than neighbouring areas. Martin Ellis, chief economist at Halifax, says: “Homebuyers continue to be attracted to the high quality of life, architecture, history, setting and community spirit offered by market towns and are prepared to pay a premium to live there. Most market towns have higher house prices than other towns in their county. The majority have also seen stronger house price growth than the English average over the past five years.”

Reasons to be cheerful

Reading too much into national averages and figures representing huge swathes of land will always iron out anomalies – in this case, those pockets of the UK where prices have remained steady or improved aren’t mentioned by the doom mongers. The one silver lining to the cloud hanging over the housing market is that price falls may make the bottom rung more accessible for first-time buyers, but this opportunity is tempered by the tightening of criteria among UK mortgage lenders this year. Keep a positive perspective though – all clouds eventually pass.