University boost for local house markets

Six out of 10 university towns across the UK have seen house price rises which have outstripped the gains made across their region as a whole during the past five years, according to high street bank Lloyds TSB.

The biggest price increases have been seen in towns that have seen a significant rise in their student population during the same period.

Aberdeen has seen the biggest jump in house prices for a university town since 2005, with the average cost of a property rising by nearly 40 per cent during the period.

The rise, which was more than double the 14 per cent reported across the whole of Scotland, coincided with a 54 per cent jump in the number of students studying in the city.

There has also been a 34 per cent rise in house prices in Coleraine in Northern Ireland, where the University of Ulster has a campus, following a 30 per cent jump in the town's student population.

House prices in Winchester have risen by 30 per cent during the past five years, compared with an increase of just 2.5 per cent across the whole of the South East, while student numbers in the town have soared by 78 per cent.

A similar pattern has been seen in Carmarthen in Wales, with house prices rising by 29 per cent since 2005, compared with a 4.4 per cent fall across the rest of Wales, while student numbers are 69 per cent higher. But the group said a rising student population did not always lead to strong house price gains.

Edinburgh has the eighth highest number of students in the UK, but house prices in the city have risen by only 11 per cent during the past five years, underperforming the wider region.

The slower growth is despite the fact that the number of people studying in the city has increased by more than a third during the same period.

London and Glasgow have also seen house price growth of only 5 per cent since 2005, despite their student populations rising by 76 per cent and 43 per cent respectively.

The average cost of a home in Birmingham is also 3 per cent lower than it was five years ago, despite a 66 per cent jump in the number of students at universities in the city.

Nitesh Patel, housing economist at Lloyds TSB, said: "Growing student numbers have had a big impact in boosting house prices in some university towns – where the increase in demand has led to the local market outperforming rest of the region.

"However, it's a very mixed picture for some of the UK's largest university towns that have seen their student population increase significantly, without it impacting on house prices."