London is a different world

The world and his dog are now talking about house prices. There is not a day that goes by without a story about rocketing prices, people being priced out and concerns of a bubble. And rightly so; housing is on the agenda like never before because it is affecting a huge number of people.

And people often cite the difference between prices in London and the South East compared to the rest of the country. But the magnitude of difference between some boroughs in London and places in England is much larger than current prices reflect.

Let’s look at property wealth across England.

Would it shock you to find out that there is just under £128 billion of private property value in Westminster? Or that there is over £100 billion in Kensington and Chelsea?

These figures are shocking, only by the order of magnitude. But they come into a world of their own when we compare them across the country.

The private property wealth in Westminster is larger than the entire property wealth of the North East. It is also greater than that of Liverpool, Manchester, Birmingham and Bristol city centre authorities combined and larger than the bottom 32 local authorities in England combined.

property_wealth

(Click on the graph above to view a larger version)

To take into account differences in the size of local authorities, we also looked at the values by population size, getting a rough indication of private property wealth per person. Again, the difference is huge. The top three authorities are Westminster, Kensington and Chelsea and the City of London with private property wealth per person of £645k, £583k and £490k respectively, while the bottom three are Burnley, Hull and Stoke at around £33k-£34k each.

Of course, there are caveats to these stats. They are a crude measure of wealth arrived at by multiplying average prices by total private stock; they do not take into account how these properties have been bought or how many have mortgages attached. And of course they are also influenced by factors such as density and area size.

Also, the prices themselves are influenced in turn by a range of circumstances – for example only a fraction of these properties are on the market at one time and this will push up prices. Prices are also subject to factors such as land, speculation, infrastructure links, foreign demand, tenure make-up and mortgage availability – to name a few – and all of these and more need to be looked at if we are to create a better functioning market.

But crucially, we need to keep in mind that there are many different housing markets in England and they all have their own challenges.

This blog article was first published here.

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