London housing ‘ripple price effect’ outpaced by …

London housing ‘ripple price effect’ outpaced by …

However, the research by Yopa shows that, much like the London market itself, the local authority housing markets surrounding London have struggled of late.

In fact, while house prices have increased by just 7.9% across London over the past five years, this rate of growth climbs to an average of just 12.2% across the local authorities that border the capital – the lowest ripple effect house price boost of all major cities analysed.

To put this performance into context, Bristol is home to the second weakest housing market ripple effect, however, house prices across the city itself are up 21.9% in the last five years, while surrounding local authorities have seen an average increase of 23.2%.

But it’s Manchester that tops the table when it comes to the strongest housing market ripple effect over the last five years. House prices in the city have soared by 37.4%, while the surrounding areas have seen an average increase of 35.1%.

Liverpool isn’t far behind its North West rival, where house prices are up 34.4%, while the city’s ripple effect has boosted house prices in surrounding local authorities by an average of 32.8% over the last five years.

Nottingham (32.6%), Edinburgh (32.2%) and Cardiff (31.4%) also boast some of the strongest rates of house price growth across the local authorities bordering each city.

A Yopa spokesperson says: “There are plenty of reasons that homebuyers living within major cities look from the inside out, although this migration is predominantly driven by the search for greater affordability, larger homes and more green space.

“In doing so, they are also able to remain within arm’s reach of their city of choice, allowing for an easier commute to work or to socialise.

“Of course, this increased demand also helps to stimulate house price growth in these surrounding areas and while the housing market ripple effect has long been highlighted across the London market, it’s the likes of Manchester, Liverpool and Nottingham that now boast the strongest benefit in this respect.”

Demographic Changes point way to Shrewd Investments

A new analysis of major demographic changes in the UK offer pointers for long-term property investment aiming to find different tenants.

A study by business consultancy Hargreaves Lansdown shows that 30% of households are made up of people living alone, (equivalent to 8.4m people). That’s up 8% in a decade while the overall population is up 6%.

The number of men living alone has grown faster than women – and 93% of the growth is among those aged 65 and over. Some 50% of those living alone are aged 65 or over.

Around 3.6m people aged 20 to 34 live with their parents – that’s 28% and up from 26% a decade ago. A third (33%) of men aged 20-34 are living at home with their parents, and 22% of young women.

Meanwhile two thirds of families (66%) are married or civil-partnered couples; 18% are cohabiting couple families – up from 15% a decade earlier.

Sarah Coles, head of personal finance at Hargreaves Lansdown, says: “The days of growing up, getting married and moving out are long gone. Our lives are far more complicated now. And while most families are still made up of married couples, the number who are cohabiting or living on their own is on the rise, so our finances need to adapt.Meanwhile, for millions of young people, the only thing to adapt to is spending an extra decade or so stuck at home with their parents. The number who still haven’t moved out in their 30s is climbing – particularly among young men.”

She continues: “Flying the nest used to be a rite of passage, now it’s a right reserved for those with plenty of money. Some 3.6m of those aged 20 to 34 are still stuck at home in their childhood bedroom. It’s doesn’t just make for a crowded kitchen, it has a major impact on the finances of everyone involved.

“Some of this is good news, because more people are studying, which means they postpone moving out until their studies are finished. However, in a huge number of cases, it comes down to the fact they can’t afford a place of their own.

“In 2023, in England, the average house price was £290,000 and the average annual income was £35,100 – so houses cost 8.3 times income. The ONS affordability threshold is five times earnings – and in England and Wales we have been above this since 2002.

“It doesn’t just mean young people are trapped, it also means that when they eventually buy, they’ll be much older. Coupled with the fact they are taking on longer mortgages, it means they’ll be saddled with debt repayments far later in life, hampering their ability to plan for retirement.

“It has implications for their parents too. They may still be covering all the costs of having their children at home and they’re still waiting for the empty nest to give them chance to super-charge their savings.

If your children are still living at home, or you think they’re likely to, there are some approaches which can help. To begin with, you can consider charging a nominal rent – perhaps to cover their share of the bills – to put you on a firmer financial footing. You can then gradually increase this towards the kind of money they’d pay for a room in a shared house. This will help make the transition away from home more manageable, because they’re used to having to budget.

“If you can afford it, you can use these regular payments to help them build up a deposit on a home. You might have an arrangement with them that they open a Lifetime ISA, and pay the first £4,000 a year into that. The government will then top that up by 25%, so they could have £5,000 towards their deposit within the first year. Not only that, but from the first pound, you’re starting the clock ticking on the year they need to hold the LISA before they buy. It could make a substantial difference to their ability to move out and move on.”–new-analysis

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