In our discussions of house prices in the UK and the degree to which growth has slowed in the past year or so, we are in danger of losing sight of how expensive residential property remains in this country, most notably in our cities. The perplexing conclusion of the latest Lloyds Bank Affordable Cities Review is that property price rises in cities have outpaced earnings growth over the past five years and that the average home in these locations now costs nearly seven times more than the average income, meaning that first time buyers struggle to take that first step on the property ladder and existing homeowners struggle to find the wherewithal to relocate within their city. Investors, however, will welcome the fact that their assets have appreciated greatly in value. In this three-part Nethouseprices series, we look at the key findings of the Lloyds review. In Part One, we will look generally at cities recording the most dramatic rises. In Parts Two and Three, we will look at the UK's most and least affordable cities respectively.
Lloyds Affordable Cities Review: Fastest growing house prices
Firstly, we set out the star performers of the past decade. This is an especially interesting period, since it takes in the years of the global financial crisis. Clearly, the cities appearing in the upper echelons of the table have recovered any ground lost during the downturn. That they are all located in southern England isn't surprising for observers of the UK property market. However, it does highlight the persistent North-South divide and it demonstrates that, however quickly prices might be rising in some regions, there is a great deal of ground to be made up before we can talk of that gap being genuinely narrowed.
A. Price growth 2007 - 2017: top ten performers
1. St.Albans, South East England
Average house price 2007 = £312,732.
Average house price 2017 = £515,899.
Price change = 65 per cent
2. Winchester, South East England
Average house price 2007 = £294,577.
Average house price 2017 = £467,821.
Price change = 59 per cent
3. Chelmsford, South East England
Average house price 2007 = £231,733.
Average house price 2017 = £357,856.
Price change = 54 per cent.
4. Brighton and Hove, South East England
Average house price 2007 = £245,818.
Average house price 2017 = £359,710.
Price change = 46 per cent.
5. Cambridge, East Anglia
Average house price 2007 = £265,696.
Average house price 2017 = £387,380.
Price change = 46 per cent.
6. Greater London
Average house price 2007 = £328,642.
Average house price 2017 = £467,001.
Price change = 42 per cent.
7. Chichester, South East England
Average house price 2007 = £270,258.
Average house price 2017 = £375,919.
Price change = 39 per cent.
8. Southampton, South East England
Average house price 2007 = £193,219.
Average house price 2017 = £266,109.
Price change = 38 per cent.
9. Bristol, South West England
Average house price 2007 = £204,113.
Average house price 2017 = £276,921.
Price change = 36 per cent.
10. Ely, East Anglia
Average house price 2007 = £198,052.
Average house price 2017 = £267,585.
Price change = 35 per cent.
UK cities overall
Average house price 2007 = £185,174.
Average house price 2017 = £244,296.
Price change = 31 per cent.
UK all locations
Average house price 2007 = £201,248.
Average house price 2017 = £248,200.
Price change = 23 per cent.
B. Property prices 2012 - 2017: top ten performers
The following is a list of the fastest growing city markets in the past five years. Again, the South of England is well-represented, but it is pleasing to see Salford in the North West and Coventry in the West Midlands occupying a couple of the top spots. Outside of the cities, these regions have been recording some of the fastest rising house prices in the UK and they are slated for exceptional growth in the coming months. Accordingly, Salford and Coventry might well be permanent fixtures in this review.
1. Greater London
Average house price 2012 = £297,502.
Average house price 2017 = £467,001.
Price change = 57 per cent.
2. Chelmsford, South East England
Average house price 2012 = £230,948.
Average house price 2017 = £357,859.
Price change = 55 per cent.
3. St. Albans, South East England
Average house price 2012 = £334,507.
Average house price 2017 = £515,899.
Price change = 54 per cent.
4. Cambridge, East Anglia
Average house price 2012 = £255,203.
Average house price 2017 = £387,380.
Price change = 52 per cent.
5. Salford, North West England
Average house price 2012 = £105,962.
Average house price 2017 = £160,191.
Price change = 51 per cent.
6. Bristol, South West England
Average house price 2012 = £184,904.
Average house price 2017 = £276,921.
Price change = 50 per cent.
7. Coventry, West Midlands
Average house price 2012= £134,897.
Average house price 2017 = £199,296.
Price change = 48 per cent.
8. Gloucester, South West England
Average house price 2012 = £147,093.
Average house price 2017 = £213,473?
Price change = 45 per cent.
9. Ely, East Anglia
Average house price 2012 = £185,135.
Average house price 2017 = £267,585.
Price change = 45 per cent.
10. Chichester, South East England
Average house price 2012 = £260,876.
Average house price 2017 = £375,919.
Price change = 44 per cent.
UK cities overall
Average house price 2012 = £169,966.
Average house price 2017 = £224,926.
Price change = 32 per cent.
UK all locations
Average house price 2012 = £174,582.
Average house price 2017 = £248,200.
Price change = 42 per cent.
Nethouseprices view?
The growth reported over a relatively short period is quite remarkable. Wages, of course, haven't risen at anywhere near this rate. In fact, average earnings have increased by just seven per cent since 2012. This disparity goes a long way towards explaining why so many housing economists talk of affordability pressures in some areas and why they believe that price corrections are almost inevitable. This point will be underlined in the next two instalments of this series, when we will look at the most and least affordable cities in the UK.
The team here at Nethouseprices hopes that you have found this guide useful.
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