Whether it be recent property price increases, or the infamous ‘help to buy’ scheme which will see the Government help potential buyers ‘take the plunge’, the issue of housing is never far from both the Government and general public’s lips. And now with a supposed house price recovery taking hold I thought it worthwhile to look at the part of the country leading the way in terms of growth, London.
According to the Land Registry, the UK capital has seen prices increase by 8.7% in the last 12 months, with the rest of the UK seeing a rise of 3.1% in the same period. One could therefore be forgiven for thinking that in terms of buying a first property, or making an investment (or perhaps both) London is the place to go. However, if we dig down into the figures, we see this isn’t necessarily the case.
Whilst the 8.7% figure represents the average across the whole of London and its 32 boroughs, there is considerable variance depending on which part of the City you’re looking at. Although boroughs such as the City of Westminster, Kensington and Chelsea (where by the way the average home price is £1,180,367), Ealing and Richmond upon Thames are all pretty close to the London wide average, many others are not.
One borough, Newham, has in actual fact seen a drop from 12 months ago of 0.8% which is on a par with the worst decreases in the country, seen in the North East and North West (0.8% and 0.7% respectively) whilst further east in Havering, homeowners have seen the price of their properties increase by just 0.8%. Others parts of London too have seen much more modest rises than the City wide average; Barking and Dagenham has seen an incline of 2.9% whilst up north in Harrow prices are up by 3.4%. Both of these rises are pretty close to the UK wide average.
At the other end of the scale, Hackney, Waltham Forest, Wandsworth and Lambeth have all seen increases of more than 10%, Lambeth being the ‘winner’ here with remarkable rises of 13.1%. The table below illustrates house price growth and average property price for a 12 boroughs.
|Borough||Property price growth (%)||Average property price|
|City of Westminster||9||846,881|
|Kensington and Chelsea||8.2||1,180,367|
|Richmond Upon Thames||7.9||512,284|
|Barking and Dagenham||2.9||220,322|
|Source: Land Registry. Refers to October 2012 to October 2013.|
Thus, many things can be said about these striking figures. One thing that sticks out for me is the wide variance in house price rises between different boroughs which means that it would be unwise to assume that wherever you go in London you’ll be ‘safe’ (in terms of house price growth.) It’s noteworthy that Newham can be seeing price decreases whilst bordering Waltham Forest has rocketing growth rates of 12.3%.
Numerous questions therefore flow from this analysis; not least, what is driving this difference in house price change? Is it simply demand, or are there other factors at play? If the latter, what are these factors? Are we happy that prices on average are increasing by 8.7% in London whilst in other parts of the country (the North East and North West) are seeing price decreases? Are different house price performances across the country (and indeed within London) inevitable or is intervention necessary? What should any intervention look like? I could go on.
On a side note, it’s staggering that average house prices in themselves in London vary so much within just a few miles. For example, despite being about 5 miles away from one another, average house prices are about two and half times the price in Chelsea and Kensington of what they are in Wandsworth and over five times what they are in Newham! Even when you take the mega expensive Chelsea and Kensington out the equation, average house prices in Hackney are more than double than in Barking and Dagenham. Hence, house prices can vary hugely depending on the borough in question.
All in all, its striking that house price changes can vary so widely within London, as well as prices themselves. It’ll be interesting to see how the picture changes as time goes on and how such varied findings will affect the social, economic and ethnic make-up of the capital. Amongst many things, those in power should consider whether the findings seen here are resulting in certain individuals and families being priced out of certain areas, and out of home ownership as a whole. Thus, is the aspiration of home ownership now out of reach for millions in the Big Smoke?