Does London need its own housing minister?

Julian Harris
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Tory minister Kris Hopkins caused something of a storm on Newsnight yesterday, by appearing relatively blase about the rocketing cost of housing in the UK.

“If I I buy a house I expect the value to rise,” said Hopkins, who was equally laid back about the country’s shortage of accommodation. “I don’t want to put a figure on how many houses should be built every year,” he said.

House prices at the start of this year are already 9.2 per cent higher than they were 12 months ago, according to estate agents Nationwide. And there’s little sign of any let-up. With millions of people suffering from the escalating cost of simply having a roof over one’s head, how can the housing minister seemingly endorse the cost getting even higher?

While it may not be a legitimate excuse for Hopkins’ comments, one explanation can be found in the fact that he represents the constituency of Keighley and Ilkley in west Yorkshire. He is, of course, a minister for the whole of the UK – but have a guess how much you can buy a nice three-bedroomed house for in Keighley, complete with wooden (ok, laminate) floors and full mod-cons.

£100,000? £200,000?

Well, according to Zoopla, you can pick up this one for under £30,000.

Anecdotes don’t make for data, however, so let’s take a closer look at some official figures from the Office for National Statistics (ONS). The boffins at the ONS analyse so-called mix adjusted averages across the country – in other words, especially weighted mean averages. Here’s what they have found:

As global credit began to crunch in the autumn of 2007, UK house prices outside London and the south east peaked at an average of £188,000. They then slipped to £160,000 in early 2009, before the recent boom took the average price up to £196,000.

Using October 2007 as a base for the sake of comparison, prices in London averaged £343,000 during that month. In 2009 they dropped to just under the £300,000 mark, yet since then they have soared to £458,000.

Let’s strip that down:

  • Outside London and the south east, house prices are up 4.3 per cent since October 2007.
  • In London, house prices are up 33.5 per cent since October 2007.
  • In the rest of the south east (excluding London), prices are up 14.9 per cent since October 2007.

The difference is huge, and prompted one property expert to describe London this morning as “a country within a country”.

“The contrast between London and the rest of the UK grows starker by the day,” added Jonathan Samuels, chief executive of Dragonfly Property Finance. “The growing North/South divide has once again been highlighted and is once again very real. The market is increasingly splintering.

Indeed the situation barely seems to be changing. Samuels was referring to today’s Nationwide figures, which show an 18 per cent hike in London prices over the past year.

A report from Jones Lang LaSalle this morning is fairly optimistic about the level of new housing set to be built in London, yet it still admits to a shortfall:

“Only 15,000 units were completed last year while the Greater London Authority suggests demand will be closer to 42,000 per annum over the next decade, with some estimates even higher,” the report says.

The crisis appears to be steepening, yet Hopkins said little about the situation in the capital during his interview last night (aside, that is, from a passing reference to “Ebbsfleet in London”).

Perhaps London needs its own housing minister.