Essential summer reading on Brexit, the election and more, exclusively for Bevan Foundation subscribers. The latest edition of Exchange looks at where we want Wales to be and what we should have achieved in five years time. It’s been a Read more »
Figures published last week by the Land Registry reveal that Merthyr Tydfil saw a 20.3% rise in housing prices during 2012 – the highest for any local authority district in England and Wales – this percentage rise was over twice that for Greater London and ten times the national average increase. But what exactly does this figure mean and how should it be understood by those of us concerned about the housing situation in Wales?
The article in the Guardian (Wednesday, January 30th) commenting on these figures does not provide any analysis or explanation simply stating that Merthyr is a ‘byword for industrial dereliction and deprivation’ and that another high percentage price gain in Salford has ‘left homeowners sitting pretty’. Is this all that we need to know? The Land Registry figures do come with a health warning in that they are ‘based on low sales volumes; likely to be an erratic figure’. So what does this imply for the operation of the local housing market in the Merthyr area?
Also of note is that whilst Merthyr has the highest percentage increase in 2012 it also has one of the lowest average house prices nationally. So is the headline figure a large increase from a low base? Does this mean that Merthyr is ‘catching-up’ with the national average? Is this a ‘good thing’ or a ‘bad thing’? Or, rather, – for whom is it a good news, and for whom is it bad news?
Is it always the case that people who have sold at this ‘higher price’ have benefitted financially after taking any outstanding mortgage into account? How many people in the area have sold but were in or near negative equity? How many of these transactions relate to repossessions (which are now included in the Land Registry figures for the first time) – and who are the gainers here? If the difference between the selling price and the outstanding mortgage was insufficient to buy a home in another more expensive part of the country (where the jobs are?), how do the sellers, who want or need to move, benefit? Will the investors attracted to the Merthyr ‘hot spot’ be able to outbid local first time buyers or other potential local buyers whose incomes are probably not increasing at the same rate as house prices apparently are? And then there are the private tenants having to find another home, or becoming homeless, when the ‘buy-to-let’ landlord sells. And then there are the agents, of various kinds, who gain from the higher selling prices and higher sales volumes. And some of the transactions could be Right to Buy sales, where a property is removed from the local rental stock.
Will such increases in house prices further constrain the possibility, at the margin, of a local first time buyer being able to purchase? Have these price increases been paralleled with any improvement in the quality of the owner occupied or privately rented stock?
So, what do we really know about the dynamics of the local housing market and the motivations and financial circumstances of sellers and buyers in an area like Merthyr? What should a high level government strategy covering Planning, Housing, Sustainability, Community Cohesion or Regeneration say about house prices as well as production and location? What outcomes are the government seeking in respect of the housing market, and for whom? Stability? Increases broadly in line with inflation? Increases at a higher percentage rate? Is the quality of the evidence base sufficient for policy making and monitoring? What should the strategic objectives be – what desired level of owner occupation? What rate of growth for private renting? What affordability targets for the private sector? Or should we all stay silent, implying that this is not an area for public debate and public policy in the urban areas of Wales?
Chris Thomas, Chair of the Board at Bron Afon Community Housing