Sunday 9 September 2012

Regional house price changes from 2004 to 2012

According to the Nationwide, the nominal average/median price of a home in each region has increased/decreased since 2004 as follows:

London +28%
Scotland +26%
Outer Metropolitan +15%
South East +8%
South West +7%
East Anglia +5%
Yorks & Humberside +1%
N Ireland +/-0%
West Midlands -1%
East Midlands -1%
Wales -4%
North West -4%
North -5%

Scotland is a real outlier, not because houses are expensive there now (it's fourth from the bottom) but because their average price was lowest of all the regions in 2004.

Feel free to knock off RPI or CPI inflation from those figures, which would make them all negative except possibly London and Scotland.

9 comments:

Sackerson said...

Yes, there is no one "housing market" and one should ignore news headlines that imply otherwise.

Derek said...

We can use MMT to explain why London and Scotland are still rising so fast. My guess is that it's because both these regions still have money flowing in because balance of trade plus (government spending - taxation) for each of them is greater than zero.

If the right statistics were available we could check it out. However I don't think that they are.

Mark Wadsworth said...

S, yup, or at least, it's very segmented.

D, oh yes, completely. The UK government fire hosed money at Northern Ireland for five or ten years to try and end the sectarian violence, which worked fine in terms of stopping people killing each other, but it was very expensive and led to a colossal house price bubble. When the taps were turned off again, Northern Ireland fell faster than anywhere else (netting off to overall plus minus no change).

Anonymous said...

Perhaps the test on house prices is "Can a pair of young, honest, sober workers buy a small but decent house in this area" - area being a parish or town environs. If not then loosen the planning rules with total disregard for nimbyism. If the rules have already been loosened then the message is clear "this place is a dump - get out".

Underlying the housing problem is the snag that millions of voters are sitting on a fake fortune that depends on a housing shortage - fix the housing problem and you will be voted out for a certainty.

As things stand the price has a long way to fall before the test can be met. Worse, the big builder's land banks were bought with a high selling price in mind - and the big builders are big party fund contributors.

Anyone for dictator?

Mark Wadsworth said...

R, there's an even less popular but far more effective way to fix the housing problem (and most other economic problems besides) and that's to tax land values instead of taxing income.

Bayard said...

R, the laws of supply and demand would suggest that building more houses will bring the price down. Yes it will, but only the price of the house, not of the land it sits on. You can't build more land, because the supply is fixed. Sure, putting more building land on to the market will depress the price slightly, but experience shows us that what people are prepared to pay for housing, i.e. the cost of borrowing money, is what dictates the price of land, not supply. Look Ireland and Spain recently. Both had a house price bubble, despite building houses as fast as they could. In fact, in Ireland, they built too many houses and thousands ended up unsold, but the only thing that brought the prices down was a collapse of the banks. Look also at the 70's in the UK, a time of unprecedented amounts of housebuilding, hand in hand with an unprecedented rise in house prices.

Anonymous said...

Mark, with respect tax certificates will not house people, only houses stood upon land in places where people want houses will do that. Further, by what right does anyone tax other people, what do they deliver in return for that taxation.

Bayard, Ireland is a low-wage low-growth area, in short the dump I was referring to, no better than Greece. The silly fools built houses on the 'build and they will come' idea - dumb! Spain had much the same idea predicated on the holiday market thus destroying the only asset Spain had - work-wise large parts of Spain are also a dump.

As I see it Surrey could take another 1 million houses before running out of land, freeing up the entire area for building in a free market would drop the price of land for a good long time. There are jobs in Surrey and access to places with jobs - but right now houses (and land) are too expensive.

However it is no good building houses jammed too close together, it destroys any sense of civilised living, so four to the acre is the guide for the private market and a bit tighter for social housing. Unless of course one gets into population control.

Mark Wadsworth said...

R, as much as I despise the NIMBYs, fact is, we actually have plenty of housing where we need it, more than enough, it's just very badly allocated (a single pensioner widow lives at Number 1 and Number 3 is converted into two flats with a couple in each).

"by what right does anyone tax other people, what do they deliver in return for that taxation?"

Income tax payers get nothing (directly) back in return, but LVT payers get, directly in return, exclusive possession to whichever bits of land they are prepared to pay for. And everybody else respects that (and the state enforces it) in exchange for their Citizen's Dividend/LVT credit. It's a market transaction.

And LVT would demolish the incentives for NIMBYs - why campaign against new housing to prop up your land value when all you are doing is landing yourself with a higher tax bill?

Bayard said...

"Ireland is a low-wage low-growth area, in short the dump I was referring to"

That doesn't disprove anything. House prices were high before the building boom, despite it being a "dump" and all those new houses did nothing to bring them down. By your reckoning, house prices should never risen in the first place. How do your points about Ireland and Spain address the parellel house price and building booms in the UK in the '70s? Or was all of the UK in the 70's a "dump" too?