The problem for UK big city house prices in 2020

The problem for UK big city house prices in 2020
Source: Getty Images

There’s a good chance that you feel most at home in the countryside.

Why would I say that? Easy. The numbers in our latest Twitter poll show that 65% of our readers responded with ‘countryside’ when asked where they felt most at home.

It got me thinking: if house prices are rising throughout the UK, does this mean that prices are rising faster in areas of the countryside?

House price data shows London’s not suffering yet

Throughout the UK, the average price for housing has been rising. Some of this is due to pent-up demand from earlier in the year. Some is undoubtedly driven by low mortgage rates. And some has come from the stamp duty holiday.

As of June, data from the ONS showed that house prices in the UK had risen 3.4% for the year. London house prices were up 4.2% for that period, so they were actually rising faster than prices in the UK as a whole. Where you look in London does make a difference – for instance, in Outer London, house prices were up just 2%, while in the City of London house prices jumped 6.9%.

The more recent data from Nationwide’s house prices statistics shows a similar story. For the quarter ending in September, house prices rose 3.5% for the UK as a whole, while London house prices were up 4.4%.

In short: if lots of people are truly moving out of cities to the greenery of the countryside, somebody forgot to tell London.

The story isn’t the same in Birmingham, Manchester and Sheffield

While average house prices in London are doing (very) well, the same can’t be said for many of the UK’s other largest cities.

Region 12-month price change
London 4.2%
United Kingdom 3.4%
Leeds 2.8%
Liverpool 1.2%
Birmingham 0.3%
Sheffield -0.1%
Bradford -2.1%
Manchester -4.5%

Source: Office for National Statistics.

The takeaway? At least for now, it certainly seems as if major cities that don’t rhyme with ‘bundon’ aren’t seeing the same house price joy that the rest of the country has seen.

To the countryside forever?

The obvious answer to why this might be happening is coronavirus. Not only are cities more crowded, leading to more concern about faster spread of the virus, but with more businesses moving to permanent, quasi-permanent or who-knows-but-maybe-permanent remote work situations, the need to be in a big city may be waning.

Why don’t we see the same with London? Because it’s… well, it’s London, right?

Urbanisation of the UK has been increasing over the past 25 years. According to data from the World Bank, 84% of the UK population lived in an urban area as of 2019. That’s up from 79% two decades ago.

For quite a number of reasons, it’s far too early to call this a lasting trend. But it’s certainly something worth watching.

As for me, as someone known to lace up the hiking boots nearly every weekend, I find it hard to quibble with the desire to get out to quieter pastures.

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