Newham has biggest rise in UK house prices

Labour Mayor Robin Wales is presiding over a gentrification strategy for Newham which has is now bearing fruit: the rise in house prices over 2015 is the largest in the UK. According to the Halifax Building Society, which constantly monitors house prices, the average house price in Newham rose 22.2% in Newham over the last calendar year. This brings the average house price up from £261,399 to £319,522.

This is in no small part due to the Olympics – or, rather, the post-Olympic regime governing the Games’ legacy. Most of the homes built on the Olympic site have been aggressively marketed on the basis that the Stratford part of Newham is up and coming and a prestigious buy – which has helped to raise prices in the area immediately around the Olympic buildings.

Newham was one of the first London boroughs to accommodate homeless families in areas well outside the capital (because of the cheaper rents outside London). Robin Wales’s Administration has also come under heavy criticism for keeping the Carpenters estate empty despite the pressing need for social homes in the area. Now that confirmation of the result of the Wales housing strategy has been released, local community members are left wondering how this squares with traditional Labour values.

In contrast with Newham’s performance, the borough of Kensington & Chelsea saw prices rise just 1% – although that did bring their new average price per unit up to £807,407, indicating that Newham still has a long way to go! Across the UK, house prices rose the least in Wales. The areas with the lowest rises were Merthyr Tydfil (prices fell by 3.8% to £103,983) and Colwyn Bay (prices fell by 2.3% to £148,272).

Last year, most of the highest price rises were in Greater London. This year, the highest rises are still in the south east, but they are largely just outside London. It seems that London properties are so expensive (not least because of changes to stamp duty, the tax on house buying, brought in last year), more people are trying to buy homes in the surrounding areas from which they can commute to work in the capital. This increase in demand is then forcing prices up in these localities.

Other recent figures from the Halifax show that house prices across the UK are continuing to rise steeply, though the pace of increase has slowed down very slightly. Halifax housing economist Martin Ellis explained that, “House prices in the three months to November were 1.4% higher than in the previous three months. This was the smallest rise on this measure since December 2014.” This indicates that there is something of a seasonal pattern, with slower rates of increase coming at the end of the calendar year.

Martin Ellis continued, “The annual rate eased from 9.7% in October to 9.0%.” This figure betrays the problem facing the Government. The rate of increase, 9%, is much higher than virtually any bank or finance house would pay – so homes are now a “good investment” rather than being a place to live. Someone with spare capital is better off putting their money into homes than leaving it in the bank. Homes can easily be insured and are very safe investments. The “investor” doesn’t even have to rent the homes out to make a profit (though doing so provides an even greater return for the “investor”, of course). This stimulates demand, which in turn pushes up prices and, therefore, the rate of return – prompting prices to spiral.

The downside for the Government is that homes become ever more affordable to prospective buyers, and the political pressure on the Government to provide more homes increases. The Government daren’t provide more homes (for sale or rent), because that would see house prices begin to fall – which would reduce the value of investors’ capital decrease and could trigger another global crisis of confidence, similar to the collapse of 2008.

This leaves all of us trying to maintain, or find, a roof over our heads mere pawns in a giant political game of monopoly.

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