It has long been recognised that the housing market in Great Britain represents a sound area for investment, but analysis recently published by the real estate advisor, Savills, illustrates the extent to which this is the case. The report also highlights the regional discrepancies in various parts of England and Wales.
Thanks to data released by the Land Registry, it can now be seen that in the last 20 years, house prices in England and Wales have increased on average by nearly 300%. (England and Wales are taken together, without Scotland, as Scotland has a separate legal system.) Looking at the overall picture, in 1995 the average house price was £66,110; and at the end of 2015 this had risen to £262,847.
Regular readers of this blog will note, too, that that marks a significant increase even in the second half of last year. In July 2015, we reported that the average house price in the UK had just hit the £200,000 mark (see UK House Prices Just Keep On Rising, posted on 9 July 2015).
But even that 300% figure tells only part of the story. Dividing the country up by wards – the smallest division in local government – it can be seen that in the top five per cent of wards property prices have increased by 538% in the period in question. A property you could buy for just over £100,000 in 1995 will now cost almost £700,000.
Yet at the other end of the scale, the five per cent of wards with the lowest increases have seen prices rise from £47,000 20 years ago to £116,000 now: a more modest rise of 148%.
The figures also reveal that it is insufficient simply to divide the country up as “London and the rest”; although unsurprisingly the areas which have seen the biggest rises in house prices are in the capital. This confirms research revealed also in this blog in December (see Survey Reveals Extent of London’s Domination of Top UK Housing, published on 14 December 2015).
Two areas in South London – Oval and Lambeth – have seen a massive 938% increase in property prices over the 20 years. At the same time, Erith and Bexley, on the fringes of the capital, have seen a more modest rise of 218%.
Nevertheless, there can be no doubt that investment in property in London is highly likely to bring a healthy return. Of 66 wards nationwide with an average sale price of over £1m, 53 are in London. Compare this with 1995, when just eight wards throughout the country had an average sale price over £300,000.
London has seen a massive social change over the period in question. Huge price rises in central London have led people to look slightly further afield, meaning that areas such as Stoke Newington and Dalston in East London – which 50 years ago would have been considered as typical working class areas – now have a high proportion of homes to which the London term “des res” (short for “desirable residence”) can be applied. And a “des res” comes with an appropriately high price tag.
Outside London, popular commuter areas, such as Harpenden and Denham, have also seen significant rises in prices. And other places where property investment has brought favourable returns include Brighton, Oxford and Cambridge.
