How the housing affordability crisis is set to spread across England by 2020

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By Chaminda Jayanetti

Parts of Yorkshire, the Midlands and Greater Manchester are set to join England’s housing affordability blackspots by 2020, according to research by Sentinel News.

The figures show that towns such as Sevenoaks in Kent and Maldon in Essex will join the familiar roll call of London boroughs in the list of unaffordable places to live by the end of the decade, unless the housing crisis is addressed.

But areas well beyond the capital’s expanding commuter belt – places such as Gedling, Craven and Trafford – will also become dramatically less affordable to the majority of people, according to our research.

The government published its latest England-wide data on housing affordability last week, showing that in 2015 the average house cost a hefty 7.5 times the average person’s annual earnings.

The figures ranged from Copeland in Cumbria, where the average house cost less than three times the average local person’s earnings, to the gilt-edged London Borough of Kensington & Chelsea, where the average house cost a staggering 40 times as much as the average local person’s annual income.

Meanwhile, a house in Camden now costs 20 times as much as average annual earnings, reflecting the impact of gentrification.

The figures show the ratio of local house prices to the earnings of people living in each area – with local residents locked out of London’s housing market as rich absentee owners from Russia and the Middle East cash in.

In fact, the eight most unaffordable parts of England to buy a house are all in London, with towns in leafy Surrey also high on the list.

The 20 most unaffordable places to buy a house in England in 2015
The 20 most unaffordable places to buy a house in England in 2015

Sentinel calculated what will happen if the change in the “house price-earnings ratio” that took place between 2014 and 2015 is repeated each year until 2020. If current house price trends continue unabated, London and the Home Counties will remain unaffordable.

The recent cooling in London’s “super-prime” property market actually means that areas such as Kensington & Chelsea and Westminster would become marginally more affordable. Instead, Hammersmith & Fulham would become the most unaffordable place to buy a house in England, followed by Kensington & Chelsea, with Sevenoaks in third.

Hackney, once regarded as one of the poorest parts of London, would be fourth on the unaffordability list in 2020, with a house set to cost 24 times average earnings – a staggering legacy of gentrification and London’s housing crisis.

Because the figures measure the change in the house price-earnings ratio, rather than simply the change in house prices themselves, it takes account of incomes growing at their current pace, making it a better forecast of affordability than measuring house prices alone.

The 20 most unaffordable places to buy a house in England in 2020, if current trends continue
The 20 most unaffordable places to buy a house in England in 2020, if current trends continue

However, by looking at the change in the house price-earnings ratio between 2015 and 2020 – if current trends continue – it’s possible to see where house prices will outstrip local incomes at the fastest rate, creating new housing blackspots.

The 20 most increasingly unaffordable places to buy a house in England in 2020, if current trends continue
The 20 most increasingly unaffordable places to buy a house in England in 2020, if current trends continue

Surrey Heath, which includes the towns of Camberley and Frimley, will become nearly twice as unaffordable by the end of the decade, with housing costing more than 20 times average earnings by 2020. The area is part of London’s commuter belt, but is also located within the Green Belt, heavily restricting how much new housing can be built.

Bracknell Forest in Berkshire, which includes the towns of Bracknell, Sandhurst and Crowthorne, will also become nearly twice as unaffordable in 2020 as it was in 2015.

But towns and villages hundreds of miles from London are also set to become dramatically less affordable to locals. Craven, a large North Yorkshire districtbased around the town of Skipton, will be nearly as unaffordable in 2020 as Islington was in 2015.

The Essex districts of Maldon and Harlow will also be hit, as people are increasingly priced out of London and driven into the Home Counties.

There is also evidence of this “commuter belt” effect taking hold around other cities. Housing in Gedling, near Nottingham, is set to go from costing six times average earnings in 2015, to more than ten times average earnings in 2020.

Trafford, the only Conservative-run local authority in Greater Manchester, will also become considerably less affordable, perhaps reflecting moves by property speculators to cash in on Manchester’s redevelopment – although housing in Manchester itself would not become much more expensive if current trends are maintained.

Housing in some parts of the country could become more affordable by 2020. Aside from the levelling off of house prices in West London, northern towns such as Middlesbrough, Burnley and Barnsley are likely to become significantly more affordable, amidst economic decline and an oversupply of housing.

The 20 most affordable places to buy housing in England in 2020, if current trends continue
The 10 most affordable places to buy a house in England in 2020, if current trends continue

If current trends continue, housing across England will, on average, become 16 percent more unaffordable between 2015 and 2020. Whether those trends will continue or not is impossible to predict with certainty.

An economic downturn, British departure from the European Union, or a combination of both, would likely slow down house price growth and force it into reverse in many areas. However, such events might also have the same impact on people’s earnings.

Ultimately, unless more housing is built, where it is needed, at a price people can afford, the true picture in 2020 will not be much better than our figures suggest.

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