Some people get excited about their holidays, or the new Beyoncé album. I, however, have been almost uncontrollably excited since last week when my mole at the Centre for Cities let slip that it was publishing a report on the links between regional inequality and Britain’s housing market. (Honestly, it was like Christmas Eve in my house last night. I left a bit of carrot out for Paul Swinney and everything.)
Anyway, to the report! Some key findings:
London saw the largest increases in housing wealth and Sunderland the smallest.
Yep, makes sense.
As housing wealth for homeowners in the Greater South East grows, so do rents for private renters.
And then the kicker:
Planning policy has made urban homeowners in the Greater South East over £80,000 richer than those elsewhere in England and Wales since 2013.
Planning reform is needed to stop the gifting of wealth to homeowners in successful cities.
The planning system makes inequality worse and threatens financial stability.
Taken together, these points suggest that there are very few winners from our current system. That homes in one corner of the country are soaring in price far faster than those everywhere else is great if you own one, and are either happy to borrow recklessly against it or to sell-up and move somewhere cheaper. But they’re bad for owners elsewhere, who relatively speaking fall behind.
They’re also bad for renters in the south east, who are paying through the nose just so they don’t need to sleep in the rain. They are bad for labour mobility, and thus for the broader economy. They are even bad for those who own a home in the south east, but may plausibly want a bigger home one day. They’re bad for almost, but not quite, everyone.
What you really want is a map, though, so here you go. This one shows average housing equity – that is, value minus mortgage – in English and Welsh cities in 2013, with lower numbers in lemon yellow and higher ones in dark green. It also uses the size of the bubbles to represent how much that number had increased by 2018. What can we learn?
Click to expand.
The first observation is that there’s a distinct correlation between colour and bubble size. You’d probably expect house prices in cities where housing was already expensive in 2013 to have increased by most in absolute terms – a 20 per cent increase of a large number, after all, is bigger than a 20 per cent increase of a small one.
But the bubble size doesn’t just represent absolute numbers. It represents the percentage of the figure where we started: house prices in expensive cities have not just gone up not just by bigger numbers, but by bigger percentages. As the book of Matthew warns, in not so many words: the rich get richer and the poor get stuffed.
Secondly, there’s a very familiar north-south divide on show. That’s there, sort of, in the 2013 prices – but there are also a few cities with low housing equity in yellow the London commuter belt (Luton, Ipswich, Swindon), and a few with higher numbers in green in the north (York, Warrington, Leeds). In other words, in 2013, there are some places in the north where high house prices made homeowners feel rich, and some in the south where lower house prices probably didn’t.
The equity growth, though, is much more tilted towards the south east. Almost every city in and around London has seen significant increases in housing equity (one unlikely exception: Aldershot; no idea). And almost no city in the north has. Even York, the poster child for “basically a southern city at the wrong end of the country” has seen prices increases on a scale that would look a bit insipid in the north. Yet even, frankly, crap cities around London have seen house price booms, because, well, because they’re around London.
While we’re at it – here are the cities that have seen the largest increase in housing equity, and those that have seen the smallest.
Click to expand.
I’d ask if you can spot any patterns but you obviously can so it’s pointless.
Anyway – you can read the full report here. And you can hear the Centre for Cities’ head of policy Paul Swinney talking about this on next week’s podcast. Told you it was worth leaving a treat out for him.