No, crazy house price increases are not purely a London phenomenon

No chance. Image: Getty.

The latest instalment of our series, in which we use the Centre for Cities’ data tools to crunch some of the numbers on Britain’s cities. 

So, let’s break the habit of a lifetime and talk about housing.

While it’s true Britain has a national housing crisis, it’s also true that we tend to talk about it from the viewpoint of London and the South East (where the problem is one of insanely high prices and the near impossibility of getting onto the ladder) than from that of other parts of the country facing other problems (quality, insecurity and so forth). Not all housing crises are created equal.

And yet: we can this revisionism too far. Over the last 15 years, every city in Great Britain has seen substantial increases in prices. Look:

The smallest increase between 2003 and 2017 came in Sunderland, and even that was over 40 per cent. In other words, for wages to have kept up with house prices, they would have to increase by an average of 2.4 per cent a year – and that’s in the city where prices have increased least.

That map shows a lot of cities, though, so – for the purposes of analysing broader trends – let’s restrict ourselves to the big guys. The next graph shows house prices change in 12 of Britain’s major cities (the 10 Core Cities, plus the capitals of London and Edinburgh) between 2003 and 2017. Let’s find out what the data tells us.

The trends are still a bit difficult to spot, to be honest – both prices in London, and the rate at which they’ve increased, are so much higher than in the other cities that it renders the rest of the graph pretty unreadable.

 

So let’s simplify things. Instead of looking at absolute prices, let’s look at how they’ve changed.

This next graph shows mean house prices as a function of their 2003 value: if the average home in a city was worth £150,000 in 2003, but £300,000 in 2017, then on the latter it’ll show up as “2.0”. That should make it easier to spot trends.

Two things instantly jump out at me about London. One is that – entirely unshockingly – the increase in house prices in the capital has been quite ludicrous. By 2017, they were nearly two and a half times higher than they were in 2003, when our data series starts – and that was already in the middle of a boom.

But another is that – while prices in London have increased steadily – it’s only since the crash that it’s really shot out ahead of the pack. Around 2009, as prices in most other cities start to drift, those in London continue to soar. That, I would guess, reflects both the city’s resilience after the crash, and the fact that over the last 10 years property in major world cities has become a sort of reserve currency for the global rich.

London’s trajectory means the rest of the graph is still a bit hard to read, so let’s do this again without it:

Bristol and Manchester are vying for the top spot in 2017: prices in both cities have nearly doubled.

But the two have followed very different paths. Prices in Manchester increased fairly steadily on either side of the Great Recession, suggesting the rises are a function of the city’s long-running regeneration. In Bristol, though, the increases started much slower, before shooting up from about 2013. My suspicion is this is escapees from London, looking for more space.


Lower down the table, things are much of a muchness, with increases moving in a what looks suspiciously like a pack: rapid increases from 2003-2007, a wobble until about 2012, followed by slower increases since. But three cities defy this pattern at least slightly.

One is Liverpool which, as I’ve noted several times in this slot of late, experienced a bit of a boom in the run up to its year as European Capital of Culture, but has struggled somewhat since the crash: that seems to be reflected in its house prices. Those in Newcastle has seen a similar trajectory, but without the dramatic boom.

And then there’s Nottingham, which has seen the smallest increase in prices since 2003, but where prices have increased rather faster since 2013. I don’t know much about Nottingham, in all honesty, so am struggling to explain this. Please do write in.

It’s difficult to come up with a coherent conclusion to all this, in all honesty, so I’m going to settle for:

  1. No, the house price crisis – let alone the broader housing crisis – Is not purely a London phenomenon; and
  2.  London house prices, eh? Bloody hell.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites

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To boost the high street, cities should invest in offices

Offices in Northampton. Image: Getty.

Access to cheap borrowing has encouraged local authorities to proactively invest in commercial property. These assets can be a valuable tool for cities looking to improve the built environment they offer businesses and residents.

Councils are estimated to have spent £3.8bn on property between 2013 and 2017, funded through the government’s Public Works Loan Board (PWLB) at very low interest rates. Offices accounted for half of this investment, and roughly a third (£1.2bn) has been spent on retail properties. And local authorities were the biggest investor group for UK shopping centres in the first quarter of 2018.

Why are cities investing? There are two major motivations.

First, at a time when cuts are squeezing council revenue budgets, property investments can provide a long-term revenue stream to keep quality public services up and running. Second, ownership of buildings in areas marked for redevelopment allows councils to assemble land more easily and gives them more influence over the changes taking place, allowing them to make sure the space evolves to meet their objectives.

But how exactly can cities turn property ownership into successful place-making? How should they adapt the buildings they invest in to improve the performance of the economies?

Cities need workers

When developing the city’s property offer, the aim should be to get jobs back into the city centre while reducing the dominance of retail space. For councils who have invested in existing retail space and shopping centres, in particular, the temptation may be to try and retain their existing use, with new retail strategies designed to reduce vacancies.

But as the Centre for Cities’ recent Building Blocks report illustrates, the evidence points to this being a dead-end. Instead, cities may need to convert the properties they own so they house a more diverse group of businesses.

Many city centres already have a lot of retail – and this has not offered significant economic benefit. Almost half (43 per cent) of city centre space in the weakest city economies is taken up by shops, while retail only accounts for 18 per cent of space in strong city centre economies. And many of these shops lie empty: in weaker city centres vacancy rates of high-street services (retail, food and leisure) are on average 16 per cent, compared with 9 per cent in stronger city economies. In Newport, nearly a quarter of these premises are empty, as the map below shows.

The big issue in these city centres is the lack of office jobs – which are an important contributor to footfall for retailers. This means that, in order to improve the fortunes of the high street, policy will need to tackle the barriers that deter those businesses from moving to their city centres.

One of these barriers is the quality of office space. In a number of struggling city centres, the quality of office space on offer is poor. But the low returns available for private investors mean that some form of public sector involvement will be required.


Ownership of buildings gives cities the opportunity to reshape the type of commercial space on offer. Some of this will involve improving the existing office stock available, some will involve converting retail to office, and some of will require demolishing part of the space without replacing it, in the short term at least. Without ownership of the land and buildings on it, this task becomes very difficult to do but will be a fundamental part of turning the fortunes of a city centre around.

Cheap borrowing has provided a way not only for local authorities to generate an income stream through property investment. but also opens up the opportunity to have greater control over the development of their city centres. For those choosing to invest, the focus must be on using ownership to make the city centre a more attractive place for all businesses to invest, rather than hoping to revive retail alone.

Rebecca McDonald is an analyst at the Centre for Cities, on whose blog this article first appeared.