We last looked at the regional property price ratios 18 months ago, in the September 2023 issue of PIN. At that time, there was a wide disparity between London, which appeared to be 23% overvalued compared to its historic ratio with UK property prices, and Scotland (-22%), the North (-20%) and Northern Ireland (-14%), which all seemed to be undervalued, when compared to the average UK property price.

As an indicator of what was to follow, it proved to be very accurate as property prices in London in the 18 months since then have only increased by 1.7%, while Scotland (4.7%), the North (6.9%), and Northern Ireland (8.2%), all performed much better during the same period, with almost four times faster property price appreciation than London, at 6.6% on average.

While the gap between the most overvalued and the most undervalued was 45% (+23% in London to -22% in Scotland) last time around, as can be seen in the table below, and despite better price growth north of London recently, the value ratios have not narrowed and there was still a 45% gap between the most over/undervalued property markets at the end of 2024 (+21% in London to -24% in Scotland).

To obtain the historical average ratio, I used data from the Nationwide House Price Index (HPI), and using the most recent quarterly price (end of Q4 2024) I then looked at the ratio for each region (compared to the UK average property price), going back five years at a time; so Q4 2019, then Q4 2014 etc., all the way back to Q4 1974, shortly after Nationwide started its HPI. This gave a total of 10 ratios for each region, going back for 50 years. Had I simply taken the average price per quarter and compared the regions, the figures would have been far more skewed towards the most recent (and much higher) property prices, hence why I chose the former method.

In this article, I will go through each region, from the most overvalued to the most undervalued, and in some cases give examples of how the property price ratio has been a strong indicator of price movement in the following years. Due to covering so many different regional property markets in this article, I have included some of the most informative comments made by those in the property industry around the UK, submitted in the latest RICS Residential Market Survey, which was released on 11 March.