Sometimes a map makes a point so simply, so eloquently, that any words one writes to accompany it feel almost superfluous. Writing superfluous words is, however, literally what they pay me for, so I guess I’d better get on with it.
The diagram below shows, effectively, what has happened to house prices in England and Wales since the financial crash. Each parliamentary constituency in the United Kingdom appears as a single identically-sized hexagon, its colour chosen to represent what happened to house prices in the area between 2007 and 2016:
- House prices in constituencies shown in red have fallen;
- Those in yellow have risen by less than 25 per cent; that, over nine years, works out at around 2.5 per cent a year or less, so given inflation effectively equates to price stability;
- Those in green have risen more markedly – the light green by 25-50 per cent, the mid green by 50-75 per cent, the dark green by 75 per cent or more;
- Those in grey – that is, Scotland and Northern Ireland – don’t have comparable data. Boo.
- It’s the work of Imactivate – the software and data company of occasional CityMetric-er Tom Forth.
Right, that’s the spiel out of the way. Here’s the map:
To see the full-size version, right click and select 'Open in a new tab'.
Paints a picture, doesn’t it?
The picture it paints, I would suggest, is that of what one might term “the London effect”. The greatest price growth has come in the centre of the city, and those areas of north east and south London that have become a lot more fashionable over the last decade. The greatest increase of all that I can find is in Hackney North & Stoke Newington, where prices literally doubled in nine years.
The further you go from the capital, though, the smaller the price rises have been. Most of Greater London and the inner ring of commuter towns has seen prices rise by more than half; but there are more stately increases in the area beyond, and those places outside the commuter belt have barely seen increases at all. Go far enough from London, in fact, to the more far flung bits of Wales or parts of the north, and prices have actually fallen.
There are two noteworthy exceptions to this broad pattern. It’s probably correct to think of the block of green around Bath and Bristol as its own housing market, rather than an extension of the London one: prices anecdotally have been pushed up there by Londoners selling-up and moving out, but they’re a bit too far out to be commuter territory, really.
Then there’s the smaller green area in Trafford to the west of Manchester. That may reflect both the resurgence of central Manchester and the rise of Salford Quays, although the fact the growth hasn’t spread beyond those plushest southern suburbs is perhaps telling.
So how should we interpret all this? It probably at least partly reflects a decade of low interest rates and a shortage of other good assets at which rich people can throw their capital. London has risen most because it’s a world city: you can see similar effects in New York and San Francisco and Sydney and Toronto.
Then there’s the argument of the economist Frances Coppola, who tweeted the map with the comment, “There is no housing crisis. There is an agglomeration effect” - that is, more and more people and jobs being sucked into London. Downthread, she added:
the point though is that the "housing crisis" is a London & SE phenomenon driven principally by the "magnetic London" effect about which @resi_analyst has written. Building more houses in London & SE merely feeds the agglomeration.
— (((Frances Coppola))) (@Frances_Coppola) July 14, 2018
I’m not entirely sold on this argument. (Well, I wouldn’t be, would I?) My sense has always been that people are following jobs, rather than housing – if the availability of housing was the key pull factor, we’d see more people moving to those many parts of the country that don’t have London’s housing crisis. Basically, I don’t see how not building more in and around London helps anyone, except possibly the Campaign to Protect Rural England – and since they need to fundraise, I’m not even sure it helps them.
It’s also worth noting that home ownership rates haven’t just fallen in London, but in most major conurbations. (See this 2016 Resolution Foundation report.) If prices have “only” risen by a quarter since 2007, when they were already eye-wateringly high, they’re still a long way out of the reach of many young people.
So while this map shows that the house price insanity is at its worst in and around London, I think there’s a limit to what it tells us about how affordable housing is nationwide, or whether building more is the solution to it.
Oh, and it’s also, as analyst Neal Hudson notes, a reflection only of the prices of homes sold, not of those which haven’t come to market. So.
You can play with more Imactivate house price maps here.