Housing price gap reveals UK's bias towards London
Research from Lloyds Bank has revealed that the gap in property prices between London and the rest of England and Wales has widened, with the average house in the Capital now costing £299,631 (or 107%) more than the national average.
This compares to the £33,834 (or 47%) gap recorded in 1996, when the total value of London's private housing stock was worth some £201.8 billion.
Now, it's worth six and a half times (or 650%) as much, coming to a grand total of £1.27 trillion.
Not only does this make prices in the capital 572% more expensive than those for England and Wales as a whole, but it also underlines the worrying regional imbalance in economic development that's prevailed in the UK over the past two decades.
Hackney, gentrification and 'social cleansing'
Lloyds' figures are also a story of gentrification as well as geographical favouritism, as shown by their revelation of how Hackney has seen the biggest rises of all the London boroughs since 1996.
Average prices in the north-eastern borough - once one of the most deprived of all London districts - have grown by an incredible 702% over this period, climbing from £75,569 in 1996 to £606,269 in 2016.
This comfortably exceeds the 450% increase witnessed by London as a whole. It also eclipses the 290% increase for England and Wales, which as we've written before, has left families throughout the UK with a lack of affordable homes to choose from.
While the report doesn't touch on the consequences of this impressive rise, other reports have noted that gentrification has forced many poorer residents to leave certain London boroughs, with the result being an inadvertent form of "social cleansing".
Prices and earnings
And in addition to Hackney, Lloyds' research also shows that Waltham Forest and Newham - two of the six least expensive boroughs in 1996 - aren't too far behind Hackney's price increases.
They saw respective hikes of 617% and 612%, making them two of the fastest growers over the twenty-year period covered by the research.
Even though their average prices still don't compare to the so-called "Prime" boroughs (Kensington & Chelsea, City of Westminster, and City of London), the surges they've witnessed have meant that house prices have rushed ahead of average earnings.
Overall, prices in the capital are 11.6 times average annual earnings, whereas in the trendier yet less moneyed areas the difference is even greater.
In Camden, for example, the gulf is 2000%. This means that, according to Lloyds' calculations, someone earning the average London salary of £34,892 will somehow need to raise or acquire a mortgage worth £697,840.
If nothing else, this provides yet another indication that the cost of living - in particular the cost of housing - is accelerating far too quickly beyond earnings, despite all of the Government's recent efforts to bring the two closer together.
As Lloyds themselves acknowledge, a big part of the reason why increases in house price have been so much greater in London is that numerous boroughs have benefited from development and investment in recent years.
In particular, the Olympic regeneration programme - which among other things saw the Athletes' Village for the 2012 being converted into the East Village - resulted in a rise in house prices in such boroughs as Newham.
Commenting on role of development in the overall growth, Lloyds Bank Mortgage Director, Andrew Mason, said, "improved transport links to the city from the outer boroughs and the 2012 Olympic Games has meant that the boroughs directly benefiting from these have seen house price growth outpace the Prime areas in recent years".
Yet as welcome as increased investment and better rail links may be for those residents who can afford to remain in a newly redeveloped area, the role of development in London's price explosion goes to show that one of the keys to shrinking the property gap is increasing investment in areas outside of the capital.
The recently reaffirmed idea of the Northern Powerhouse is a welcome step in this direction, yet analyses have found that even recent and planned investments in the north of England are skewed more towards to the North West, leaving the North East and Yorkshire relatively under-served.
Added to this, even with the Government's commitment to spend some £56 billion on the north over the next five years, spending on infrastructure per person will still remain the highest in London.
In other words, the gap will most likely continue widening, extending into the future the trends outlined in the chart below.
As a result, we can expect more reports like Lloyds' to emerge over the coming years, reminding us of what too many people already know from experience.
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