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City house prices up 382% over past 25 years

With 26 towns in the UK – including Perth and Dumfries – applying for city status as part of this year’s Diamond Jubilee celebrations, Bank of Scotland has looked back at how house prices in cities have performed over the past 25 years.

Truro (550%), Westminster (522%) and Edinburgh (509%) are the three cities that have recorded the biggest price rises since 1986. House prices in UK cities have risen by an average of 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.

Both Edinburgh and Inverness (450%) feature amongst the ten best performing UK cities since 1986.

The research also shows that the majority of UK cities outperformed their region in terms of house price growth between 1986 and 2011. Nearly 70% – 40 of the 59 cities surveyed – recorded average house price increases above their region’s average over the period.

In Scotland, four of the six cities – Edinburgh, Inverness, Aberdeen and Dundee – all outperformed the Scottish average. Glasgow and Stirling, however, have seen average prices rise more slowly than for Scotland as a whole.

Nitesh Patel, housing economist at Bank of Scotland, commented:

“Cities have typically seen higher house price growth than the UK average over the past 25 years. The majority of UK cities have also outperformed their region. 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.

“The performance of cities in Scotland has been similar with four of the six cities outperforming the Scottish average. Edinburgh and Inverness have seen very strong house price growth, both featuring in the top ten UK cities since 1986. Glasgow and Stirling, however, have seen average prices rise more slowly than for Scotland as a whole. There are, therefore, no guarantees that city status benefits its population’s homeowners.”