Milton Keynes offers the solution to the South East's housing crisis.
It’s long been joked that the rising value of house prices is the main topic of conversation at middle class dinner parties. And given the prevalence of house price stories in the British press, the topic certainly seems to shift newspapers.
The BBC posed an interesting question over the weekend, asking ‘Does your house make more than you?‘. The article even included a calculator for you to answer the question.
But as we’ve stressed many times before, the answer to this question is very different depending where in the country it is asked. The table below shows that only two cities have seen, on average, houses ‘earn’ more than salaries – London and Cambridge. And all cities in the top five are in the Greater South East, with each of them seeing house prices increase by more than £10,000 over 2013.
House prices and annual salaries in cities in England and Wales
Source: Land Registry, ONS Annual Survey of Hours and Earnings
According to the Land Registry, seven cities saw their house prices fall, including Barnsley and Rochdale shown above. And all of these cities were in the north.
Milton Keynes is the big exception, coming out bottom of the list. The average person earned over £28,000 more than their house over the course of 2013.
There are two reasons for this. Firstly, wages in the city are very high (the seventh highest of all cities) reflecting its strong economy. Secondly, Milton Keynes has responded to high demand by steadily increasing the supply of houses, restraining house price growth. This means that Milton Keynes is a much more affordable place to live than many of its neighbours.
Of course the £144 increase in average house prices looks paltry compared to places such as Reading and Oxford. But this gets to the heart of the contradiction in the way that the British press reports on the housing market. On the one hand it decries how difficult it is for first time buyers to get on the housing ladder. Then on the other celebrates how much house price increases are making people ‘wealthier’, supported by campaigns against building on the green belt.
The reality is this: the national housing shortage is really a Greater South East housing shortage. And the ever increasing housing affordability issues that face cities such as Cambridge and London threaten to price people out of the job opportunities that are available in them and threaten their future economic growth. This in turn spells trouble for the national economy.
Milton Keynes offers the antidote to the Greater South East’s housing troubles. And it’s time its neighbours followed suit.
Director of Policy and Researchp.firstname.lastname@example.org
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