Not so grim up North - 2021 house prices show demand in the North

Homeowners on the opposite sides of Scotland have seen the biggest increase in the average house price in the past year according to new analysis from Yorkshire Building Society.

Residents of Inverclyde in the west of Scotland and the Scottish Borders in the east have seen the average house price in their Local Authority District (LAD) grow by 21% in the year to October 2021. The average property price in Inverclyde has increased from £97,558 in October 2020 to £118,083 a year later. And in the Scottish Borders, house prices have grown by £33,233 to £191,668 in the same period. (See Table 1)

Northern areas of Britain dominate the list of the top 10 fastest growing LADs when it comes to house prices over the past year, with four in total from Scotland including Clackmannanshire in fifth place (19.1% increase) and Renfrewshire (17.6%) in ninth place.

Hyndburn in Lancashire, where the average price has increased from £99,300 to £119,947 (20.8%) comes in at third place, with neighbouring Burnley not far behind with an 18.5% (7^th) increase over the year to October.

Carmarthenshire on the south-west coastline in Wales recorded the largest price increase in the Principality – growing by £30,445 (19.5%) to £186,912 (4^th). The remaining three LADs with the fastest annual price growth are Hartlepool (6^th), Knowsley (8^th) in Merseyside and East Lindsey (10^th) in Lincolnshire where average prices have grown by between 17.5% and 18.6%.

The seaside town of Worthing in West Sussex had the largest price rise in southern England, with average values growing from £275,546 to £323,112 representing a 17% (£47,566) increase.

But a different story in London…

At the other end of the spectrum, eight of the ten LADs with the lowest price increase over the same period are in London. In the Yorkshire’s analysis of Land Registry and ONS data, the only area to see a decline in average house price is the South London borough of Lambeth where prices fell by 1.6% to £533,828. (See Table 2)

Interestingly, the neighbouring boroughs of Southwark and Wandsworth in South London recorded relatively modest price increases in comparison to the top 10. In Southwark, the average price grew by just 1%, to £516,418, and in Wandsworth by only 2.4%, to £636,237.

After Lambeth, the next lowest increases were both in East London, with Tower Hamlets and Newham increasing by 0.4% and 1% respectively.

Within the capital there was significant variation, with Outer London LADs recording an increase of 7%, more than double the 3% increase recorded in Inner London boroughs, an average lifted by a 14% increase in the price of homes in the borough of Hammersmith and Fulham.

Nitesh Patel, Strategic Economist at Yorkshire Building Society, commented:

Given the record economic contraction last year and the continuing uncertainty in the early months of 2021, the performance of the housing market continues to surprise. Our research shows the property market operating on two levels, strong activity in the Midlands and northern Britain but relatively subdued in the South, particularly in London.

There are some strong drivers of demand that explain the extraordinary price growth seen in many parts of the country. Low borrowing costs is an important factor, particularly for homeowners with high levels of equity. The increased availability of low deposit mortgages has also been an enabler mostly for first-time buyers. Unemployment has also been falling for the last year and the jobs market has been getting stronger since the phased re-opening in April.

The stamp duty holiday with zero tax payable on purchase price of up to £500,000 (and then lowered to £250,000) is another significant driver, particularly for home-movers and first-time buyers will have benefitted from those taking their next step and moving along the property ladder.

However, two impacts of the pandemic might be even stronger drivers. Due to the restrictions and less travelling, many households saved more than they normally would have, estimated at around £170 billion of “excess” savings. And the second factor is the pandemic has encouraged a once in a lifetime opportunity to revaluate their housing needs. Buyers are seeking out more space to work from home as well as more outdoor space, which may explain why price growth London was more muted, with flats forming a high proportion of homes in the capital.

In the near-term housing demand is likely to exceed supply, however with prices at an elevated level in comparison to local earnings, this should dampen activity and as a result we’ll see more modest price increases going forward in 2022. That said, buyers revaluating their housing needs probably has longer to run.

Table 1 – Top 10 Local Authorities with the biggest average house price increase, October 2020 – October 2021

Local Authority	Region/Country	Average House Price 3 months to October 2020 - £	Average House Price 3 months to October 2021 - £	Annual % Price Change	Annual £ Price Change
Inverclyde	Scotland	97,558	118,083	21.04%	20,524
Scottish Borders	Scotland	158,434	191,668	20.98%	33,233
Hyndburn	North West	99,300	119,947	20.79%	20,648
Carmarthenshire	Wales	156,467	186,912	19.46%	30,445
Clackmannanshire	Scotland	133,333	158,802	19.10%	25,469
Hartlepool	North East	108,826	129,044	18.58%	20,217
Burnley	North West	90,942	107,745	18.48%	16,803
Knowsley	North West	135,900	160,626	18.19%	24,725
Renfrewshire	Scotland	124,820	146,829	17.63%	22,009
East Lindsey	East Midlands	179,418	210,803	17.49%	31,385

Source: ONS and Land Registry December 2021

 

 

 

Table 2 – Bottom 10 Local Authorities with the lowest average house price increase, October 2020 – October 2021

Local Authority	Region/Country	Average House Price 3 months to October 2020 - £	Average House Price 3 months to October 2021 - £	Annual % Price Change	Annual £ Price Change
Lambeth	London	542,556	533,828	-1.61%	-8,728
Tower Hamlets	London	470,780	472,590	0.38%	1,810
Newham	London	372,556	376,201	0.98%	3,645
Southwark	London	511,080	516,418	1.04%	5,338
Hounslow	London	420,489	429,517	2.15%	9,028
Wandsworth	London	621,571	636,237	2.36%	14,666
Cheltenham	South West	289,956	299,177	3.18%	9,221
Camden	London	838,963	866,598	3.29%	27,635
Bracknell Forest	South East	339,552	350,837	3.32%	11,285
Croydon	London	376,761	390,764	3.72%	14,002

Source: ONS and Land Registry December 2021

Methodology

To ensure the sample is representative and account for any unique moment in time anomalies, prices are the average of the three months to October 2020 (Aug, Sep & Oct 2020) and October 2021 (Aug, Sep & Oct 2021). To control for sample bias, we have used a minimum number of transactions in each period.

All information correct at time of publication.

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