Consciousness of Sheep
Related Articles
Home affordability – the ratio between average city house prices and average gross local earnings – across UK cities has hit its worst level since the 2008 crash, according to Lloyds Bank’s Affordable Cities Review.
The average UK city house price has risen to its highest ever level of £211,880 – 6.6 times gross average annual earnings. But the headline UK figure hides a widening north-south affordability divide, with 17 of the 20 least affordable cities in the Southeast of England.
Oxford was the least affordable city in Britain, but only because the central London boroughs were included in Greater London; which is the third least affordable city behind Winchester. Londonderry in Northern Ireland is the UK’s most affordable city. Stirling in Scotland was the second most affordable city in the UK. Swansea is the only affordable city in Wales to appear among the 15 most affordable.
Andrew Mason, Lloyds Bank Mortgage Products Director commented:
“House price rises in the past three years have risen more steeply than average wage growth, making it more expensive to buy a home in the majority of UK cities. This has also widened the North – South divide, as house prices in the South have generally seen stronger growth than in the North.”
The growing affordability problem raises the spectre of another housing crisis in the event of another economic downturn leaving people unable to pay off their mortgages. However, in the longer-term, the widening affordability gap may render cities like London unsustainable as essential workers are forced to move elsewhere. As Tim Watkins observes in The Consciousness of Sheep:
“The recent property boom in London has effectively driven out many of the key workers that a city depends upon to continue operating in the long-term – nurses, firemen, road workers, electricians, plumbers, water and sewage workers, cleaners, refuse collectors, etc. These workers too are obliged to commute into the city, and only continue to do so because the relatively higher incomes they can obtain continue to make it worthwhile. However, as wages continue to fall, transportation costs rise and public sector funding dries up, this is likely to become unsustainable. Workers will be better off taking lower paid jobs within walking or cycling distance of their homes than continuing to commute several hours each day in and out of the city.”
The social democratic answer to this problem would be to change the banking rules so that mortgages reflect the value of a property rather than the income of a borrower; while simultaneously reintroducing rent controls. This is painful and politically difficult because it would inevitably burst the house price bubble. So we will more likely leave it to the free market to crash house prices for us as residents of the cities in the Southeast wake up to contaminated water, blocked drains, broken roads, failing utilities and emergency services that struggle to respond to a fire, crime or medical emergency in less than an hour.
