“On a bad day… you can see Wales,” a chief executive of a national housebuilder joked some years ago while unveiling homes by the Severn Estuary outside Bristol. Since then, local prices have soared, forcing many workers in the booming Somerset area to buy on the other side of the river.
Ballooning house prices in the now achingly trendy metropolis and the axing of tolls across the Severn have attracted many buyers to South Wales. It’s just one of the varying regional dynamics across the UK making the weather map more mixed than most forecasters portray.
Bristol prices have risen by 99% over the past decade to £348,000, the third-highest increase out of 113 local authorities in England and Wales tracked by the Office for National Statistics. The top two were Thurrock in Essex (+110%) and Luton (+107%), the seeming link perhaps that both encompass large maritime and air transport hubs. London witnessed a more modest 73%, albeit to a hefty £535,000, while Hartlepool in County Durham managed only an anaemic 18%. England as a whole was up 57%.
Bristol has seen, by some stretch, the largest increase in population of any of the bigger cities in England in the 10 years between the 2011 and 2021 censuses, at 10.3%, to 762,800. In second place was Leeds (+8.1%), while England and Wales together increased by 6.3%.
Even a flat in Bristol clocks in at £260,000 on average, not far behind £280,000 for a semi just across the water in Monmouthshire. Renters are even more stretched: it’s the most expensive city outside London, at £1,315 a month, the equivalent of 42% of average earnings, Zoopla reports.
The rest of the West Country has fared less well. October asking prices in Cornwall and Devon fell by 1.5% and 2.1% on an annual basis, the worst-performing region in Britain, according to this week’s Rightmove survey.
Prices in these counties – once inflated by hordes of well-heeled west Londoners – have been undermined by changing holiday patterns. Following lockdowns, owners of holiday properties could confidently let out their homes on Airbnb for the entirety of the summer for thousands of pounds a week, yet one housebuilder recently told me owners are struggling to get many bookings at all and that’s for as little as half the rate as air travel has revived.
In the August RICS survey, Devon agent David Hickman confided: “Landlords are selling up, as are some second-home and holiday-home owners, and we expect this trend to consolidate for the next three years”.
London is widely assumed to be the most challenged market, but transaction levels seem to be less badly hit than most. Sales rates have always been slower in the capital, but according to RICS, the number of sales per agent at 10.1 over the preceding three months is only 3% below the 10-year average. There’s a brisker 16.9 sales per quarter for the whole of England and Wales, but that’s 28% below the norm. Bellway this week suggested that sales rates may have picked up recently in the wider South East.
Bristol has seen the largest increase in population of any of the bigger cities in England
Political factors can influence regional markets. Take Scotland, where rent controls on existing tenancies appear to have backfired.
Many landlords have reacted by seeking new tenants, pushing up average new rents by 12.7% over 12 months, the fastest in the UK, according to Zoopla’s Q3 Rental Market Report. This, plus the relative lack of private affordable rental properties and the lowest house prices relative to earnings in the UK, has cushioned the sales market from some of the wider economic pressure. Zoopla finds prices edging up by 1.6% over the past year, better than any other region, with the whole UK dipping by 0.5%.
One big political ruction, the canning of HS2 to Manchester, may well have an impact on one of the UK’s most aggressively developed markets. Many of the shining blocks of flats there were no doubt priced on the hope of the line eventually reaching the North West. Now the prime minister has switched the signal to red, could apartment prices turn the same colour?
Alastair Stewart is an equities analyst and consultant