New official statistics from the Office for National Statistics (ONS) prove that the housing crisis is spreading to many cities across the UK, not just London.
The ONS has used its house price statistics to explore the housing market across the UK. The most recent complete data ranges to the end of 2015.
The median price paid for residential property in England and Wales was £207,500 in 2015, up by £12,500 (6.4%) on 2014. This was largely driven by a 7% annual increase in England, while growth in Wales averaged just 2%. The median price paid for property ranged from around £77,000 in Blaenau Gwent to almost £1.2m in Kensington and Chelsea.
Official Statistics Prove that Housing Crisis is Spreading
The majority of local authorities in England and Wales recorded an increase in median price between 2014-15. The median price decreased in eight local authorities, five of which were in the North West, two in Wales and one in London. There was just one London borough where the median price decreased over this period – Kensington and Chelsea. The ONS believes that this is likely the result of higher Stamp Duty rates on the most expensive properties from the end of 2014.
The data shows that the gap between the median price paid for properties in regions with the highest and lowest prices has become wider over time.
This gap is largely the result of the steeper increase of house prices in London, reports the ONS. Between 2014 and 2015, London recorded an average house price rise of 9.6%, while an average increase of just 5.5% was seen in the North East.
In 2015, Barking and Dagenham had the lowest median house price in London, at £245,000. Although this was the cheapest price paid in the capital, it was higher than two-thirds of all local authorities in England and Wales, reflecting generally higher housing costs in London and its surrounding areas.
Since 2007, the median price paid for properties in the most expensive 10% of England and Wales has soared by 37.6%. Over the same timeframe, there has been a decline in median house prices for properties in the least expensive areas, of 3.9%. ONS believes that there are many factors that may cause changes in house prices, including average earnings and the rate of population change. When there is higher demand for owner-occupied housing in a certain area, house prices tend to rise at a faster rate than in areas where demand is lower, says the report.
The ONS claims that local authorities in which the population has increased the most in one year typically have a larger increase in house prices the following year.
While the population of England and Wales has risen steadily over time, this is not the only factor that pushes up demand for housing. One factor that affects housing demand is the characteristics and composition of residents in households. In 2015, people living alone occupied 28.6% of all homes in the UK. This can contribute to rising house prices, which in turn makes it more difficult for young people to purchase homes.
Commenting on the recent report, the Senior Research and Policy Analyst at the Resolution Foundation, Lindsay Judge, says: “Today’s ONS figures confirm that the housing crisis facing Britain is about much more than the inability of younger people to buy their own home. Housing is becoming less affordable. Homeowners and renters alike are seeing more of their earnings eaten up by accommodation costs, undermining living standards for millions. And while London remains the outlier in terms of costs, this housing crisis has now spread to cities across the country.
“While there has been a slight uptick in the number of new houses built this year, we are still falling well short of the levels needed to make housing genuinely affordable again. It’s encouraging that the Prime Minister has put housing at the heart of her Government’s plans. We now need to see the Government roll up its sleeves to meet its target of one-million homes built this Parliament.”