So where are these areas, just how are property prices faring, and what does it mean for you?
Booming pricesHalifax looked at the ten areas with the biggest growth in economic activity over ten years, and then examined how house prices had fared there in that time. They discovered that properties in areas with the most robust economies had grown an astonishing £110,000 in a decade.
It looked at its most recent figures - from 1999-2009, and discovered that in that time the prices of these houses rose 145% to an average of £184,491 in 2009. This is equivalent to a weekly increase of £228.
Incredibly, this rise was almost a third higher (31%) than the increase in the average house price in the ten areas struggling the most economically. The overall house prices in the booming areas were also around 25% higher than struggling areas.
In the bad years the booming areas have fared better too. Since 2007, the ten most economically robust areas saw house prices fall just 12% - this compares to a drop of 27% in the areas seeing unemployment rise fastest.
Where is booming?The area with the biggest rise in economic activity was, unsurprisingly, central London, where it rose 91% and house prices were up 123% over the period. They have even risen 14% in the years since 2009. As the biggest city, it will always tend to attract new businesses which want to be near centres of population or other businesses in a similar field.
Outside London, the next biggest area of economic growth was North Lanarkshire, where it rose 70% and house prices 123%. In some cases this reflects new businesses attracted to the area, in others it owes much to a massive investment of government money in regeneration of schools and housing.
Next on the list was Edinburgh, benefiting from major investment on the back of devolution at the beginning of this period. Here economic activity is up 64% and house prices have risen 156%.
Biggest price risesThe two areas recording the largest house price gains between 1999 and 2009 were also amongst the best performing areas in terms of increases in economic activity per person.
Brighton and Hove, which recorded the largest rise in house prices (206%), also saw the fourth biggest increase in the value of economic activity (63%). The house price outperformance lies in the fact that it is not only an attractive destination in itself, but a useful commuter option for London workers.
Cornwall and the Isles of Scilly, which recorded the second biggest rise in house prices (198%), was the sixth fastest growing area in terms of economic activity (60%). Here outperformance comes in part from the booming second-home market in the area.
Why the link?The reasons why economic activity and house price growth are linked is simply supply and demand. In boom towns growing rapidly, people are keen to move in and take advantage of jobs, and local people can afford to trade up to a more expensive home. The newcomers snap up the houses, and more people are competing over a dwindling supply, which pushes prices up.
On the flip side, in areas going through tough times, work is difficult to come by. Some people will leave the area, others will have to sell up because they have lost their job and cannot afford the mortgage. This means the supply of houses for sale will increase, and demand has fallen, so house prices will fall.
So what does this mean for you?If you are in an area when times are tough, this is difficult news to deal with, as if you are forced to sell up and downsize because you have hit difficult times, you could be in for a nasty surprise when it comes to valuations. Alternatively, if you are trying to move from a tough area to a booming one you could face a major shortfall.
Martin Ellis, housing economist at Halifax, added that there were implications for us all:"Looking forward, the pace at which the UK economy recovers will be a key determinant of the outlook for the UK housing market. Similarly, those areas that perform best in economic terms are likely to fare best in terms of house price movements."
Table 1: House prices in the 10 Areas with highest growth rates in economic activity per person between 1999-2009
Local Area (Nuts3)**
Economic Activity (GVA) % Change 99-09
Average house price £, 1999*
Average house price £, 2009*
House Price % Change 1999-2009
House Price % Change 2009
Inner London - East
Edinburgh, City of
Brighton and Hove
Inverness & Nairn and Moray, Badenoch & Strathspey
Cornwall and Isles of Scilly
Aberdeen City and Aberdeenshire
Average for Top 10
Sources: Halifax, ONS