Luton recorded the biggest percentage rise in property prices among major UK towns and cities in 2016, according to Halifax. 

The average house price in the Bedfordshire town was 19.4% higher than in 2015, increasing from £214,934 to £256,636 in 2016. This is more than two and a half times the 7.5% rise in the UK as a whole.

The second biggest rise in average house prices was in the outer London borough of Barking and Dagenham, where average house prices surged by 18.6%.

Dunstable, near Luton, came third with a 17.9% rise in the last 12 months.

All of 2016’s top 10 hotspots are in London and the South East. Basildon (17.2%), Chatham (17.1%), Tower Hamlets (15.8%), Watford (15.3%) and Basingstoke (15.1%) also recorded price rises that were at least double the national average.

Property prices down

However, a small number of towns did see a fall in average house prices in 2016. By far the most significant was in Aberdeen in Scotland where prices fell almost 7% (-6.9%).

There were also small price decreases in Falkirk (-1.1%) and Inverness (-0.9%), Bangor (-1.7%) and Londonderry (-0.4%) in Northern Ireland and Blackpool (-0.5%) and Stockton on Tees (-0.1%) in England. Halifax noted that many of these areas are suffering from relatively weak employment and economic conditions, which continue to constrain local housing demand.

Martin Ellis, housing economist at Halifax, said: “Most of the areas that have seen the biggest house price rises during 2016 are either within close commuting distance of the capital or in outer London. Demand in these areas has risen as substantial property price rises in central London over the last few years have caused increasing numbers of people to seek property in more affordable areas.

“A few towns have experienced price falls, with the biggest in Aberdeen, which is highly dependent on the North Sea oil and gas sector. The substantial fall in oil prices in the past couple of years has hit the industry hard with adverse impact on demand for homes in the area. Price declines elsewhere have been modest.”