This graph displays the relationship between the UK and its sub-regions, except Wales which follows an almost identical path to Scotland, in terms of house values in comparison to movements in GDP within the UK.
Looking at these statistics, it’s apparent that there is a significant difference between not only the value of houses across the UK, but the rate at which they fell and recovered, notably London which enjoyed a very quick recovery, while Northern Ireland still recedes.
Northern Ireland and Scotland are both under performers in comparison to the rest of the UK according to these figures, but on a sub-regional level how does this differ?
With the term, mini economies, being used to describe certain areas such as Aberdeen and London, which barely noticed the effect of the recession according to GVA values, it is hard to pin point the exact effect on housing because not enough sub-regional data is available to determine such an impact. However, going by the GVA it is believed that Aberdeen can attribute its success down to special circumstances according to Hacker Young (2012) who believe it is due to the exposure to the oil and gas industry, much like London is to the financial industry.
Rank
|
Town/City
|
GVA 2008
|
GVA 2009
|
Change
|
(£ per head)
|
(£ per head)
|
%
|
||
1
|
Aberdeen
|
28,422
|
28,731
|
1.09%
|
2
|
Edinburgh
|
35,134
|
34,950
|
-0.52%
|
3
|
London
|
34,964
|
34,779
|
-0.53%
|
31
|
Belfast
|
30,819
|
29,816
|
-3.25%
|
UK Average
|
20,911
|
20,341
|
-2.73%
|
Source: Hacker Young, 2012
However both Madsen (2012) and Valadez (2010) highlight that there should be a correlation between GDP and HPI or so it was within the US, it doesn’t appear to be the case with the UK, or possibly it is due to the special circumstance of the recession.
References:
Hacker Young. (2012). Aberdeen Only UK City to Create More Wealth This Year. Available: http://www.uhy-uk.com/resources/news/aberdeen-only-uk-city-to-create-more-wealth-this-year/. Last accessed 26 Feb 2013.
Madsen, JB 2012, 'A behavioral model of house prices', Journal Of Economic Behavior & Organization, 82, 1, pp. 21-38, Business Source Premier, EBSCOhost, viewed 26 February 2013
Nationwide (2012) UK House Prices Adjusted for Inflation, London: Nationwide Statistics.
Nationwide (2012) UK Monthly Indices (Post '91), London: Nationwide Statistics.
Office of National Statistics (2013) UK GDP since 1948, London: Office of National Statistics.
Valadez, RM 2010, 'The housing bubble and the GDP: a correlation perspective', Journal Of Case Research In Business & Economics, 3, pp. 1-18, Business Source Premier, EBSCOhost, viewed 21 February 2013.
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