Scottish and Welsh towns dominate the UK top 10 with five and two towns respectively in the list. Additionally, all 10 towns recording the biggest price increases in the last 12 months are outside southern England.

The information comes from the recently published Halifax 2^nd quarter regional house price index which details house price movements based on the lender's mortgage offers.

Irvine in Strathclyde, Scotland is the UK's top property hotspot with a 44% rise in prices over the past year. Average prices in Irvine are up from £69,536 in 2004 Quarter 2 to £100,249 in 2005 Quarter 2.

Port-Talbot (43%), Motherwell (41%), Glenrothes (39%) and Blackwood in Gwent (38%), along with Irvine, make up the top five.

There have been significant changes to the top ten in recent quarters with only one town, Port Talbot, in the list six months ago. All 10 towns delivering the strongest price rises over the past year had, and continue to have, average house prices below the UK average.

Best performing counties

At a county level, County Fermanagh in Northern Ireland (31%) has seen the biggest price rises over the last year followed by Highlands in Scotland (27%) and Dumfries & Galloway in Scotland (22%). Counties in Scotland dominate the list of counties across the UK that have recorded the fastest price rises for the year. There are six counties in amongst the 10 counties UK-wide recording the biggest price gains in the last 12 months.

A number of counties in the South East have recorded small house price falls over the past year: Oxfordshire (-2%), Buckinghamshire (-1%), Hertfordshire (-1%) and Surrey (-1%). Nine of the ten counties recording the smallest increases over the last 12 months were in southern England.

North/South House Price Divide

There has been a distinct north/south divide in house price performance over the past year with more subdued or falling prices across southern England. Northern Ireland (26.9%) and Scotland (12.5%) have experienced the strongest price rises, followed by Yorkshire and the Humber (8.9%), Wales (8.7%) and two northern English regions –, the North West (7.8%) and the North (4.9%). As previously forecast, Greater London (-2.5%), the South East (-0.6%) and the South West (1.6%) have seen the most modest performance.

However, the slowdown in the South of England should be viewed in the context of the substantial house price rises in these regions over the past 10 years. Prices have risen by 207% in London, 180% in the South East and 202% in the South West since 1995 Quarter 2.

The gap between prices in London and the rest of the country has declined to its lowest level in more than seven years. The average price in the capital stood at 1.47 times the national average in 2005 Quarter 2 compared with a peak of 1.87 times four years' ago (2001 Quarter 3). It is now at its lowest point since 1997 Q4. The north/south divide, however, remains wider than it was ten years' ago when the average price in London was only 1.26 times the national average.

In the second quarter annual house price growth across the UK fell below annual average earnings growth for the first time since early 2001. The 3.7% rise in UK house prices compares with a 4.6% increase in earnings over the past year. Earnings are expected to continue to outpace house prices during the second half of 2005 which should see the house price/earnings ratio to decline from its current level of 5.5. This would help somewhat to ease the affordability difficulties faced by first-time buyers.