House prices in Bath have defied the slump and risen faster than those in almost all other UK towns and cities, new figures show today.
Property values in the city rose by 5% in 2011, according to latest research by building society Nationwide.
While that is a relatively small increase compared to housing boom years, it ranks Bath as the third best-performing of any regional town or city this year.
They city was beaten only by Bradford and Cambridge with increases of 10% and 7%. House prices in London, which is treated as a regional housing market by Nationwide and not included in the table, also rose by 7%. The average price of a house in Bath now stands at £253,609.
The city now has the second-highest house prices in the South West, just £1,000 behind those in the upmarket Dorset seaside town of Poole.
But while Bath’s house price rise is good new for those already owning a property or buying one, in a year of job losses and widespread pay freezes it is cold comfort for those trying to get on the housing ladder.
Bath is now among the least-affordable places to live in the region, taking average incomes into account.
Over the past 10 years house prices in Bath have risen by 79%, making it one of the housing hotspots of the region. Price rises in neighbouring areas such as Somerset (71%), South Gloucestershire (66%) and Wiltshire (59%) have not been as sharp although homeowners in Bristol have seen their properties increase in value by 87%.
Across the UK house prices inched ahead by a modest 0.3% in the fourth quarter, taking the annual rate of change to 1.1%.
Nationwide chief economist Robert Gardner said: “The rise in house prices recorded over the past 12 months could hardly be described as a strong performance, but against a backdrop of anaemic economic growth and a deteriorating labour market, UK house prices were surprisingly resilient.”
However, he pointed out that resilience was less evident in other areas of housing market activity in 2011, with mortgage approvals remaining low at just over half the long-term average. Demand and supply were weak but well matched.
“Although high rates of unemployment, falling real wages and the uncertain economic outlook kept many potential homebuyers on the sidelines, the supply side of the market was similarly squeezed,” Mr Gardner added.
“Thanks to continued low interest rates, the number of forced sales remained low. Together with a dearth of building activity in recent years, this prevented a glut of unsold homes from accumulating on the market.
“This meant that although demand and supply were both weak, they remained relatively well matched, providing little impetus for prices to move strongly in either direction.”
The new year is unlikely to bring any significant change in the market, according to Mr Gardner.
“2012 isn’t shaping up to be much better than 2011, for the UK economy or the housing market,” he said.
“With the economy struggling to gain momentum, labour market conditions are likely to remain challenging in 2012, deterring buyers from entering the housing market.
“This may tip the demand/supply balance in favour of buyers.
“However, there are few indications that a flood of properties is about to hit the market, so tight supply conditions will continue to provide some support for prices.
“The outlook is very uncertain, and will depend crucially on how the wider UK economy performs. Nevertheless, as things stand, the housing market in 2012 looks likely to be characterised by low levels of activity once again, with prices moving sideways or modestly lower over the course of the year.”
