Property hotspots: top areas for long-term house price growth

With UK house prices nearly tripling over the last two decades, how much could you have made on your home?

UK house prices have nearly tripled since 2001, with the value of the average home soaring by a massive £163,700.

Homeowners who purchased a home before the global financial crisis saw a dip in its value between 2008 and 2012.

But these losses have been offset by strong house price growth since 2013, according to our latest research.

Where have house prices increased the most?

Kensington & Chelsea in west London has been crowned the number one property hotspot for long-term house price growth.

Homes in the exclusive London borough have soared by nearly £740,000 in the past 20 years, making it the top-performing area for house price growth of any region since 2001.

It means that the average cost of a property in Kensington & Chelsea now stands at £1.1m, after prices rose by £380,200 since 2011 and £739,800 since 2001.

The commuter hotspots of St Albans and Elmbridge saw the strongest growth in the east of England and south east respectively, with property values climbing by more than £402,000 in both locations over the past two decades.

Trafford, an easy drive from Manchester, boasted the biggest house price rises in the north west. Meanwhile, rural areas took the top spot in other regions, such as Monmouthshire in Wales.

Top area for house price growth in each region over the last 20 years
Area Region Average house price (May 2021) Average house price growth over 10 years (since May 2011) Average house price growth over 20 years (since May 2011)
Kensington & Chelsea London £1.1m £380,200 £739,800
St Albans East of England £624,000 £221,900 £402,300
Elmbridge South east £639,500 £220,300 £402,200
East Dorset South west £433,600 £141,500 £273,500
Trafford North west £341,000 £112,700 £224,700
Stratford-on-Avon West Midlands £338,300 £102,500 £206,500
South Northamptonshire East Midlands £329,300 £116,800 £205,900
York Yorkshire & the Humber £292,000 £67,700 £188,500
Monmouthshire Wales £283,400 £79,400 £183,500
Newcastle upon Tyne North east £164,400 £20,300 £99,900
Scottish Borders Scotland £162,500 £15,000 £97,900

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What's happened to house prices in your area?

House prices in the south have risen the most during both the past 10 and 20 years, with southern regions occupying all of the top four spots.

Perhaps unsurprisingly, London led the way, with homes in the capital increasing in value by an average of £201,300 since 2011 and £337,400 since 2001.

To find out how house prices have changed in different areas of London over the last two decades, scroll further down our article.

At the other end of the scale, homes in Northern Ireland have seen the smallest price increases during the past 20 years, with gains of only £69,600.

And homes in the north east have increased in value the least since 2011, at an average of just £13,300.

House price growth across the regions over the last 20 years
Region Average house price (May 2021) Average house price growth over 10 years (since May 2011) Average house price growth over 20 years (since May 2001)
London £495,400 £201,300 £337,400
South east £363,100 £123,400 £227,100
East of England £321,000 £114,900 £210,900
South west £284,500 £82,800 £180,100
East Midlands £211,500 £65,600 £138,500
West Midlands £207,100 £60,700 £130,600
North west £183,300 £41,600 £117,100
Wales £178,600 £44,200 £116,900
Yorkshire & the Humber £174,800 £38,500 £113,800
Scotland £158,400 £22,200 £93,400
North east £135,200 £13,300 £81,300
Northern Ireland £153,500 £19,000 £69,600
United Kingdom £256,100 £73,900 £163,700

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Why is this happening?

Since the late nineties, price growth has been fuelled by falling credit costs, which has kept mortgage payments low as prices have risen, according to Howard Bettridge, Hampton's regional director in the south east.

He explained: "Many households are also now making lower monthly mortgage payments than they were in real terms a couple of decades ago.

"This has been coupled with a house building hangover from the aftermath of the 2007 crash which has created a lack of supply, pushing prices up, while house building is only just getting back to pre-2007 levels."

On top of these longer-term trends, the last 18 months have seen price growth fuelled by white collar workers’ lockdown savings, a stamp duty holiday, and homeowners reassessing how and where they live, Bettridge added.

"Prices in London and the south east spent much of the last decade surging away from the rest of the country. But this changed around three years ago, with value growth in the north outpacing the south."

What could this mean for you?

With UK house prices nearly tripling since 2001, many homeowners have seen significant rises in the value of their property since their purchase, according to research.

You can also use My Home to track your home and other properties you're interested in. It means that you can list your home for sale when the time is right for you.

However, long-term house price growth also means that buyers face forking out larger deposits to step onto, or move up the housing ladder.

If you're in need of a helping hand, you could consider one of the government schemes aimed at assisting buyers, such as Help to Buy and Shared Ownership. And, for first-time buyers, there's stamp duty relief available beyond the current stamp duty holiday.

Which areas of London have seen the biggest house price rises?

London boroughs with the most expensive homes have seen the highest levels of house price growth.

Kensington & Chelsea took the top spot, followed by the City of London and Westminster, where property values have risen by £739,800, £570,200 and £512,200 respectively in the past 20 years.

Barking & Dagenham, which has the most affordable homes in the capital, came bottom of the table, but even here house prices have increased by an average of £242,600 since 2001.

Overall, the typical home in all but seven London boroughs has seen its price rise by at least £300,000 in the past 20 years.

House price growth across London over the last 20 years
London borough Average house price (May 2021) Average house price growth over 10 years (since May 2011) Average house price growth over 20 years (since May 2001)
Kensington & Chelsea £1.1m £380,200 £739,800
City of London £831,300 £294,000 £570,200
Westminster £780,900 £257,000 £512,200
Hammersmith & Fulham £755,400 £261,200 £501,000
Richmond upon Thames £759,200 £274,500 £477,900
Wandsworth £646,500 £244,600 £435,400
Camden £636,100 £221,900 £424,700
Barnet £619,400 £217,300 £416,900
Waltham Forest £545,700 £255,900 £394,700
Haringey £558,700 £224,200 £389,400
Islington £552,500 £214,500 £379,500
Harrow £573,800 £213,000 £377,400
Hackney £527,600 £228,000 £368,700
Brent £541,100 £192,100 £365,500
Lambeth £543,400 £205,200 £365,400
Kingston upon Thames £563,600 £193,100 £353,700
Southwark £493,200 £214,400 £347,700
Redbridge £502,300 £202,100 £345,800
Bromley £523,900 £204,500 £337,800
Ealing £512,800 £201,200 £337,500
Merton £495,800 £191,900 £336,900
Lewisham £458,500 £204,600 £326,500
Newham £437,000 £203,900 £315,800
Hillingdon £477,700 £182,500 £310,500
Tower Hamlets £451,000 £185,000 £308,300
Sutton £471,700 £180,700 £304,000
Hounslow £473,800 £170,400 £297,300
Greenwich £415,200 £184,800 £295,800
Enfield £441,200 £166,600 £285,400
Havering £414,800 £168,300 £281,000
Bexley £426,000 £167,300 £273,800
Croydon £412,300 £161,600 £265,900
Barking & Dagenham £345,300 £149,500 £242,600

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UK house prices hit new high

Average house prices are up 30% since the market peak in 2007 as successive lockdowns prompt buyers to search for more space.

The average value of a home in the UK has reached £230,700 – 30% above the previous market peak in 2007.

House prices have been driven higher by a mismatch between the number of homes for sale and surging demand from potential buyers.

And a pandemic-led clamour for more space is making family homes particularly sought-after, with demand for this type of property more than doubling during the past year alone.

Scroll down to get more insight from our latest House Price Index report and find out what it could mean for you.

House price growth continued to gather pace in June, with property values increasing at an annual rate of 5.4%. That's more than double the growth of 2.2% seen during the previous 12 months.

Northern Ireland and Wales saw the strongest house price growth at 8.6% and 8.4% respectively, the highest rates for 16 years in both countries.

At a regional level, house price growth was at its highest in the north west and Yorkshire & the Humber.

And at a city level, Liverpool, Belfast and Manchester took the top three spots. In fact, cities in northern regions, where property remains more affordable, accounted for nine of the top 10 places with the fastest house price growth.

Meanwhile, house price growth in London has been trailing the rest of the UK for eight months, and this month was no exception.

The housing market showed no sign of slowing in June, with the number of housing sales agreed running 22% ahead of average levels in 2020.

Demand from potential buyers eased slightly, dipping by 9% in the first two weeks of July after the stamp duty holiday on the first £500,000 of property ended.

But to put this into context, buyer demand remains 80% higher compared with this time of year in the more normal housing market conditions of 2017 to 2019.

In London, demand from potential buyers has polarised. In the city's outer boroughs, where there's larger volumes of houses and properties with outside space, buyer demand is a staggering 86% higher than average levels between 2017 and 2019. In contrast, in inner London boroughs, it is only up 2%.

Meanwhile, the shortage of homes for sale across the piste continued, with a 25% fall in the number of homes on the market in the first six months of this year compared with the same time in 2020.

What could this mean for you?

First-time buyers

While buyer interest for houses has more than doubled as a result of the pandemic-led search for space, demand for flats is broadly unchanged from a year ago. So it could be a good opportunity to purchase an apartment.

That said, expect to see competition from other people taking their first step onto the property ladder, with lending to first-time buyers up 25% compared with 2020.

If you're after a helping hand, the government has a number of schemes aimed at assisting first-time buyers, including Help to Buy and the new 95% mortgage guarantee.

And remember that that there's also stamp duty relief available for first-time buyers that goes beyond the current stamp duty holiday.

Home-movers

The number of homes for sale has failed to keep pace with demand from potential buyers since January, with no sign of a rebalance expected to play out imminently.

You could be in a strong position to secure a quick sale on your existing home at a good price – particularly if you own a house that's suitable for a family.

Discover how sought-after your home could be by using our handy map tool. And use our My Home experience to get an estimate of how much your property is worth to help you plan for your next purchase.

When it comes to searching for your next property, the limited number of homes on the market means you are likely to have less choice. So register with us to receive alerts whenever a property that meets your criteria is listed for sale.

You could also face stiff competition from other potential buyers. Be sure to find out from our estate agents how to put yourself ahead of the pack, from getting your paperwork in order, to lining up your mortgage brokers and solicitors in advance.

And, if more space is high on your agenda, why not see how far your budget could stretch in different areas?

What’s the outlook?

Annual house price growth is expected to reach 6% in the coming months. It’s then expected to start easing back to between 4% and 5% towards the end of the year as the second phase of the stamp duty holiday ends and economic conditions become more challenging.

Head of research explained: "Demand is moderating from record high levels earlier in the year, but remains significantly up from typical levels, signalling that above average activity levels will continue in the coming months.

"London has a two-speed market at present, with domestic demand driving price growth in the outer boroughs, while the lack of international business and leisure travel is affecting demand in the more global real estate markets towards the centre of London.

"As COVID-19 progresses at different rates across the world, unrestricted travel may not resume for some time yet, but when it does, demand will start to pick up once more."