Unemployment holding back North East property prices?
A recent study has indicated that house prices in the North East of England are being held back by high unemployment rates in the region. This claims come despite the fact that joblessness in the area has fallen by 25% over recent years.
Employment property links
The survey from Lloyds bank shows that property values in areas of the UK with high unemployment have increased more slowly in the last six years, in comparison to regions with smaller numbers of people out of work.
At present, the unemployment rate in the North East of England is 7.5%, encouragingly 2.5% less than one year ago. However, this is still 25% greater than the national average of 5.6%.[1]
In places such as Dorset and Surrey, where unemployment rates are at their lowest, property prices have risen by an average of £65,000. In the top-twenty areas where unemployment is at its highest, prices have only risen by an average of £4,000. These areas include places such as Hartlepool, South Tyneside and Middlesbrough.[1]
North East growth
Additional research from Lloyds has found that the North East has currently has the highest rate of business activity within the UK. What’s more, the region is experiencing continuing export growth, with the gross value of goods sold overseas rising by 7.2%, in comparison to a 3.9% fall in the UK as a whole.[1]
Unemployment holding back North East property prices?
On saying this, recent investigations from the University of Sheffield revealed that as many as six times more public sector jobs fell in the North East in comparison to London since 2008.[1]
Deeper truth
Founder and Chief Executive of North East sales and letting business KIS, Ajay Jagota, gave an honest response to the figures. Jagota stated that, ‘“It might seem like it’s stating the obvious to say that house prices are lower where less people are in work, but these figures show a deeper truth about the North East economy – and in particular why our region needs to have more power transferred to it from London.’
‘Unemployment is falling in our region, but is still the highest in the country by a considerable margin. It’s little coincidence that we’ve lost 6 times as many public sector workers than the rest of the UK,’[1]
Jagota went on to say that ,’ there’s a lot to be proud of in our economy right now, high exports, high business activity and falling unemployment. If unemployment does lead to lower house price growth, a housing boom could be just around the corner.’ He warns however that this, ‘depends on how we build on our recent progress.’[1]
He concluded by saying, ‘The North East economy is currently at what I call the ‘proving’ stage. It might not look like it’s doing all that much, but kept in the right conditions and it could double in size before your eyes. For me, one of those conditions is greater economic autonomy.’[1]
[1] http://www.propertyreporter.co.uk/property/is-unemployment-holding-back-north-east-house-prices.html