The average London home is now worth more (in nominal terms) than it was at the height of the property boom in the fourth quarter of 2007. However, while property prices in the capital have recovered what they lost during the financial crisis, property in the rest of the UK has not.
The chart below shows the average price of property across different regions of the United Kingdom. What it reveals is that while property prices in London are now 1% above their 2007 peak, those in the rest of the country are not. Property prices in the South West for example, remain 9.7% below their 2007 peak, while those in Yorkshire and Humberside are still 16% below the pre-crisis peak.
Average UK property prices by region: January 2000 – March 2013 (Click on the chart for a larger version)
Date courtesy of Nationwide House Price Index.
Over the past twelve months the price of a typical UK home has risen by 0.2%, however prices in London have risen by 4.6%.
Outside of London, the Outer Metropolitan area was the strongest performing region (not shown), with annual price gains of 1.6%, whilst the North West was the weakest with prices down 1.8%. And it’s not just in terms of house prices that London is bucking the trend.
The economy in the capital is also booming, and as Allister Heath, editor of City AM noted recently, “London is now the most important it has ever been to the UK economy, accounting for a record high of 21.9 per cent of UK gross value added.” According to Nick Crafts, economic history professor at the University of Warwick, London’s share of output is now even bigger than it was in 1911 when the capital was the world’s most important and globalised city.