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There's good news for those applying for city status as part of the Diamond Jubilee celebrations. According to new research, over the past 25 years, house prices in the vast majority of cities have outperformed those in their regions - with some increasing an incredible 550% over that period. Compare that to the towns applying for city status - where just one has outperformed the region.

So why do cities tend to do better, and would city status transform life in these towns?

Fast-growing

House prices in cities have, of course, had their ups and downs over the years. However, according to the Bank of Scotland, over the last 25 years the cumulative growth has been astonishing. The city with the fastest-growing average house prices has been Truro at 550%, closely followed by Westminster at 522% and Edinburgh at 509%.

On average, house prices in UK cities have risen by 382% over the past quarter of a century from £35,209 in 1986 to £169,707 in 2011. This exceeds the increase of 347% for the UK as a whole over the period.


Ahead of regions

Not only do the price of houses in cities grow faster than the average UK property, the majority also outperform the region. Nearly 70% recorded average house price increases above their region's average over the period.

Brighton & Hove is the city to have outperformed its region by the biggest margin; recording a 500% increase in average house prices since 1986 - 180 percentage points higher than the 320% rise for the South East as a whole. Truro and Edinburgh have seen the next biggest gains relative to their region.

Why

So what is the appeal? Nitesh Patel, housing economist at Bank of Scotland, commented: "City house prices are generally supported by demand from those looking to gain from the economic and lifestyle benefits often associated with residing in major urban areas."

Much of the attraction of living in a city is the opportunity to be close to the office. The concentration of workplaces in the city centre means more people jostling for housing within easy reach of the office. At the same time, there are those who hanker after museums, art galleries and restaurants that stay open after 10pm, who will naturally gravitate to cities.

And while the city can grow outwards, there will always be a limited supply of property very near the centre, so in many cases prices will increase as demand soars and supply remains stable.

New cities

The effects of city status have also been seen in places that have become cities over the last 25 years. On average, these new cities have seen house prices increase by an average of 379% since 1986. This is slightly below the average rise for all those places that have been cities throughout the last 25 years, but above the average increase for the UK as a whole.

All three towns that became cities in 2000 - Brighton & Hove, Inverness and Wolverhampton - have recorded stronger house price growth than their region since becoming cities.

Diamond Jubilee

There is a hope, therefore, that gaining city status in the Diamond Jubilee celebrations could help boost the value of houses in the towns. The 26 towns that have applied for city status this year have, on average, not experienced as rapid house price growth over the last 25 years as existing cities.

Prices in these towns have increased by an average 345% - close to the UK average of 347% Only four of the 25 applicant towns analysed - Goole, Dorchester, Doncaster and St Austell - have recorded a house price increase in excess of the average for all existing cities. Meanwhile, many at the lower end of the table have trailed behind the UK average. Luton, Medway, Craigavon and Croydon have actually risen less than 300% over the last 25 years.

However, whether those towns named as cities end up becoming a runaway success in the housing market remains to be seen. The question is whether city status is going to inspire more people to move to these areas, pushing up prices, or whether they will need to develop more of the traditional attractions of a city before they see buyers flock to the new cities.

What do you think? Do you fancy a move to Croydon, Southend-on-Sea or Dudley (all of whom have applied for city status)? Let us know in the comments.



10 UK Cities with highest house price growth, 1986-2011

City

Region

Average House Price 1986 (£)

Average House Price 2011 (£)

25 year change (£)

25 year change

(%)

Truro

South West

37,237

242,100

204,863

550%

Westminster

Greater London

88,121

547,767

459,646

522%

Edinburgh

Scotland

33,524

204,038

170,514

509%

Brighton And Hove

South East

41,582

249,532

207,950

500%

Lichfield

West Midlands

33,317

198,572

165,255

496%

Bath

South West

50,411

277,548

227,137

451%

Inverness

Scotland

30,605

168,264

137,659

450%

Worcester

West Midlands

34,266

182,644

148,378

433%

Derby

East Midlands

26,280

138,501

112,221

427%

York

Yorkshire & Humber

35,141

184,205

149,064

424%

Cities Average

35,209

169,707

134,498

382%

United Kingdom

38,616

172,427

133,811

347%


10 Cities that have outperformed their region the most, 1986-2011

City

Region

Average House Price 1986 (£)

Average House Price 2011 (£)

25 year change (%)

Region's

25 year change

(%)

Out-performance of Region (Percentage Points)

Brighton & Hove

South East

41,582

249,532

500%

320%

180

Truro

South West

37,237

242,100

550%

374%

176

Edinburgh

Scotland

33,524

204,038

509%

351%

158

Westminster

Greater London

88,121

547,767

522%

382%

139

Lichfield

West Midlands

33,317

198,572

496%

373%

123

Inverness

Scotland

30,605

168,264

450%

351%

99

Winchester

South East

72,677

365,607

403%

320%

83

Bath

South West

50,411

277,548

451%

374%

76

Worcester

West Midlands

34,266

182,644

433%

373%

60

Derby

East Midlands

26,280

138,501

427%

372%

55

Cities Average

35,209

169,707

382%

347%

35