House prices in ELL boroughs continued to surge in value throughout the economic downturn in spite of far fewer people buying properties in the areas.
Data released by the Office for National Statistics on Monday showed the huge growth in property prices over the past 18 years. A median flat in Hackney would have sold for around £65,000 in 1995, but by 2013 the same home would have been worth £345,000, an increase of 430 per cent. During the same period the national average property price has risen by 261 per cent. Inflation over that period is just 70 per cent.
All four ELL boroughs have seen price rises greater than, or equivalent to, the national average but the most dramatic rises have come in Hackney, where the average home gained £50,000 in value in just one year between 2012 and 2013. Though the ONS data does not include local data for 2014 this trend is likely to have continued, with the National Housing Federation reporting in November that an average home in the borough had earned nearly £100,000.
Discussing Hackney Council’s response to the dramatic surge in prices in the borough Philip Glanville, cabinet member for housing, said: “Hackney Council has pledged to deliver 3,000 new homes in the next four years and more than 600 of these will be built by the council.”
“For those who wouldn’t qualify for a council home at a social rent, but can’t afford rocketing private rents and ever-increasing mortgage deposits, the council is also building 500 homes for shared ownership.”
The astronomical rate at which prices have risen in the boroughs has not been met by similar growth in the number of properties being bought. Though sales totals have been steadily increasing in recent years, they are still some way short of their pre-financial crisis peak. In Croydon over 8,200 properties were sold in 2007, a figure that more than halved in just one year. The figure has now recovered to 4,800, but in the same time prices have risen to nearly 8 per cent of their pre-crisis peak.
The figures are similar in Tower Hamlets, where the median price has risen by nearly £100,000 in 10 years. Almost twice as many properties are being bought in the borough now compared to 1995, but the figures are still notably lower than during the housing boom of the early 21st century, when around 5,000 properties were being bought every year. At its 2004 peak, 15 house purchases were made a day in Tower Hamlets.
Responding to the latest ONS findings, housing minister Brandon Lewis said: “We’re determined to get Britain building and help people who work hard and want to get on the property ladder to do so, which is why we’ve introduced Help to Buy, which helps people buy a home with a fraction of the deposit they would normally require. Since the scheme’s launch, over 77,000 households have become homeowners through this scheme.”
“Leading house builders are building more as a direct result of the scheme, with house building now at its highest level since 2007 – but we want to go further. That’s why we’ve invested £19.5 billion in building new affordable homes, with nearly 217,000 delivered since 2010, and why we’re going to invest billions more to deliver the fastest rate of affordable house building for two decades.”
Campbell Robb, chief executive of the housing charity Shelter, said: “When young people have to save for more than a decade before they can scrape together a deposit, and their only choice in the meantime is to remain stuck in their childhood bedrooms or paying out dead money to landlords, there is a serious problem.”
The ONS also examined what sort of accommodation people in the boroughs were living in, with three of the four boroughs having seen rises in the proportion living in flats. In Tower Hamlets over 90 per cent of the population now live in these properties.