18th May 2015
Homeowners in local authorities with the lowest levels of unemployment have witnessed the value of their property jump by almost £65,000 since the trough of the last housing market cycle in 2009, claims new research.
The analysis from Lloyds Bank asserted that there is a clear link between levels of unemployment and house price performance in recent years, whereby those areas with the lowest average levels of unemployment since 2009 – as measured by the claimant count – have, on average, recorded bigger house price gains
It found that the average house price in the 20 local areas that recorded the lowest unemployment rate between 2009 and 2015 rose by 25%, or £64,783.
In contrast, the 20 areas with the highest unemployment experienced an average house price increase of just £4,100, or 3%.
The lender said the outperformance is more marked once the impact of London is removed from the calculations with Great Britain excluding London recording an 11% price increase. The capital has seen the biggest price gains in recent years but none of the lowest 20 unemployment areas are in Greater London.
The position for the 10 areas with the lowest levels of unemployment is even more marked with an average house price rise of 28% for these areas since 2009; more than 60% higher than the Great Britain gain and 150% more than Great Britain excluding London. Hart and Winchester, which have had the lowest average unemployment rates since 2009, have recorded house price gains of 33% and 37% respectively in the last six years.
Similarly, those areas with the highest levels of unemployment have typically under-performed compared to the Great Britain average. The 20 areas with the highest levels of unemployment have recorded an average house price gain of 3%. Hull and Middlesbrough – the two areas with the highest unemployment – have seen house prices increase by only 2% and 1% respectively over the past six years.
Andy Hulme, Lloyds Bank mortgages director urged that there has been a “very clear relationship between conditions in the local jobs market and house price performance during the period since the housing market downturn between 2007 and 2009”.
He said: “Those areas with low unemployment and high levels of employment have tended to record above average house price growth. Areas with high unemployment and relatively low employment have, on the other hand, typically underperformed.
“The past few years have underlined the importance of local economic health in determining house price behaviour. Other factors, however, are also key drivers of house price trends including the strength, or otherwise, of housing supply.”