Halifax research shows that house prices have risen by an average of 187pc across the UK since the housing market recovered in February 1996. The average UK house price has risen from £62,453 in Q1 1996 to £179,425 in Q3 2006 - an average increase of 10.6pc per annum.

No surprises to hear that London delivered the largest increase in house prices since the 1996 recovery - a rise of 240% (12.4% p.a.). However, the capital had one of the largest price falls in the downturn with prices down 23% over Q2 1989 to Q1 1996.

Halifax said the smallest increase since the 1996 recovery has been in Scotland, up 110% (7.3% p.a.), although this rise should be viewed within the context of virtually no fall in house prices north of the border during the early 1990s.

In 1996 the average house price in each of the UK’s 12 regions was less than £80,000. In Q3 2006 the average house price was above £100,000 in all regions and higher than £150,000 in 8 UK regions.

The Western Effect
The best performing county since the recovery in February 1996 has been Cornwall with a 274% (13.3% p.a.) rise in its average house price, followed by Carmarthenshire in Wales 264% (13.0% p.a.). All of the ten best performing counties saw price increases of more than 240%. Six of the top ten are from Wales. While Cornwall saw a larger than average price drop of 22% in the early 90s downturn, Welsh counties saw flat to rising prices over the period.

Pricey Surrey
The most expensive county is Surrey with a current average house price of £314,037. Surrey also had the highest house prices in February 1996 (£96,983). In 1996, only 8 counties had an average house price above £75,000; 35 had an average house price beneath £50,000. Now all counties have an average price above £100,000; 5 have an average price above £250,000.

Best Towns
Newry in Northern Ireland has experienced a 371% (15.8% p.a.) increase in its average house price from £38,326 to £180,546 since the February 1996 recovery. Walton on Thames in Surrey was the next best performer with a 368% (15.7% p.a.) increase to £407,235. Of the five best performing towns, two are in Northern Ireland and two are in Surrey. House prices in Newry rose 25% during the early 90s housing market downturn, while prices in Walton on Thames fell 26%.

Two thirds of towns (362 out of 538) have seen at least a £100,000 increase in their average house price since the February 1996 recovery. All towns, bar Lochgelly in Fife (£49.457) and Greenock in Renfrewshire (£49,289), have seen at least a £50,000 increase in their average house price since 1996.

..and expensive towns
The highest priced town in 2006 is Gerrards Cross in Buckinghamshire with an average house price of £712,828. In 1996 prices were highest in Kensington & Chelsea (£206,119), followed by Gerrards Cross (£205,968).

In 1996, 27% of towns had an average house price beneath £50,000; only 6% had an average price above £100,000. Now 16% of towns (85) have an average house price above £250,000. Only 5% of towns now have an average house price beneath £120,000. Lochgelly in Scotland is the only town with an average price below £100,000.

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Key Points
- Three regions have seen a tripling in their average house price since Q1 1996 - London (240%), Northern Ireland (231%) and South West (213%)
- London and the South East have both seen an increase in their average house price of more than £150,000, at £189,997 and £154,061 respectively
- The average house price in London (£269,188) - the most expensive region in 2006 - is 120% higher than in Scotland (£122,511), the least expensive region.
- Northern Ireland’s average house price (£167,391) is now ranked 6th out of 12 UK regions, compared with 11th out of 12 UK regions in 1996 (£50,601).
- Scotland’s house price ranking has slipped from 6th out of 12 in 1996 (£58,334) to 12th out of 12 in 2006 (£122,511).
- Half of all counties in the UK (50 out of 102) have seen a tripling in their average house price since 1996.
- Nine counties have seen at least a £150,000 increase in their average house price since 1996. All these counties are in the south of England. The largest increase has been in Surrey, up £217,054.
- The average house price in the highest priced county, Surrey (£314,037) is almost treble (194% higher) that in the least expensive county, Blaneau Gwent (£106,713).
- The Isle of Anglesey has seen the sharpest rise in its county house price ranking, up from 91st in 1996 to 43rd in 2006 as its average house price has increased from £44,743 to £161,346.

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Optimistic future for the house market
Halifax say that sound fundamentals support the UK housing market, underpinned by a stronger economy, which has now grown for 56 consecutive quarters, the longest unbroken period of economic growth on record. There are also record high levels of employment, which should continue to support a healthy housing market over the longer term.However, prices increases seen in the past decade are unlikely to be repeated in coming years because of affordability constraints. House price growth closer to earnings growth seems a more likely trend.

Interest Rates and Un-employment
The early 90s housing market downturn was triggered by steep increases in both interest rates and unemployment. Neither are in prospect for the UK economy. While interest rates have risen modestly and could rise again before the end of the year, they are still low relative to longer term averages.

The current Bank of England base rate of 4.75% compares to a 20 year average of 7.3% and an average rate during the 90s housing market downturn of 9.4%. Employment levels across the UK fell by a total of 779,000 during the housing downturn, or an average of 120,000 p.a., while the claimant count unemployment rate averaged 7.9%. In the past year alone employment across the UK has risen by 220,000 and by 770,000 over the past three years. The claimant count unemployment rate is currently 3.0%.

Summing up, Halifax’s Tim Crawford, Group Economist said: “The premium for living in London has increased over the last ten years as the average property price in the capital has more than tripled. The South West has emerged as a highly sought after destination, led by Cornwall.

The housing market in Northern Ireland has seen well above average house price growth, led by Newry and Antrim, two of the five top performing towns in the UK since 1996.”