A former down-at-heel corner of east London, the borough of Newham, has witnessed the steepest rise in property prices in the UK this century, according to data from Halifax, while the slowest increases have been in Newry in Northern Ireland.
The average house price in Newham has leapt by 429% since the start of the century, from £75,762 in 2000 to £400,574, a gain of 429%. The borough encompasses Stratford, home to the 2012 Olympics, and is peppered with new glass and steel residential towers, as well as some of the most deprived wards in the UK.
“When I started working here 18 years ago we were lucky to get £170,000 for a terraced house,” said estate agent Ian Merchant, of Bairstow Eves in Stratford. “We thought they would never go through £200,000. Now they sell for £500,000.”
The 429% gain in Newham compares with the UK average 207% increase in house prices in the two decades to November 2019, according to figures prepared exclusively for the Guardian by Britain’s biggest mortgage lender. The second most rapid price growth was in Waltham Forest, a north-east London borough. Hackney, Barking and Dagenham and Redbridge, all boroughs in east or north-east London, all featured among the top 10 risers.
Only one local authority outside of London – Brighton and Hove – was ranked in the top 10 for price growth this century.
But the figures also reveal how far house prices have marched ahead of wage growth since the start of the millennium. While the average UK house price has tripled from £91,199 to £279,998 over the past 20 years, wages have risen only by about 70%.
There were no price rises of less than 100% anywhere in the UK over the two decades.
However, interest rates have tumbled since 2000, easing the pain for homebuyers, as well as underpinning high prices. In 2000, a two-year, fixed-rate mortgage for first-time buyers from Abbey (now Santander) carried an interest rate of 6.79%. Today, the bank’s best deal is priced at 1.89%.
The local authority with the lowest price growth has been Newry, Mourne and Down, in the south-east of Northern Ireland, where the average price rose from £78,843 to £162,222.
In late 1999, the typical home in that part of the Northern Ireland, dominated by the Mourne mountains in the south and Strangford Lough in the north, fetched a few thousand more than the average home in Newham. But today, while £250,000 will buy a four-bed, three-bathroom detached home in about a quarter of a hectare (0.5 acres) in Newry, it’s only enough for a one-bed ex-council flat in Stratford.
Four local authority areas in Northern Ireland appeared at the bottom of the table for price growth in the UK, with Newry joined by Derry, Antrim and Lisburn.
The factors driving house prices in Northern Ireland are markedly different from the rest of the UK. In the early part of the century, the peace dividend spurred price rises, followed by the extraordinary Celtic Tiger property boom in the Republic that reverberated across the border into Newry, before spectacularly crashing. More recently, Brexit and its impact on the border with Ireland has dominated the property market.
“House prices have always been on the low side here,” said Charlie Casey, Sinn Féin councillor and chairperson on the Newry, Mourne and Down council. But with the market soaring again in the Dublin area, some people are taking advantage of low prices around Newry. “We’re roughly halfway between Dublin and Belfast and we’re finding now that some people are buying here and commuting every day on the train down to Dublin.
“A hard border would have been an absolute disaster,” Casey added. “A Brexit border down the Irish sea at least leaves the island of Ireland as more of a single economic entity. Let’s see how that works out.”
In Newham, the Olympics sparked a construction boom in the area, which has transformed the skyline. “I remember very well the day they announced the Olympics were coming to London,” says Merchant. “We had a three-bedder on at £200,000. The day after the announcement, we had an offer of £250,000 on it.”
House price rises in the area cooled markedly after 2015, said Merchant, with many properties still 10% below their peak, partly because tax on buy-to-let homes has removed many investment buyers. “Five years ago, about 70% of buyers were buy-to-let. Now, most landlords are selling up or sticking with what they have because of the changes in tax.”
But a cooling market is little comfort for Newham council, which says housing stress in the borough is intense. The borough’s population has risen more rapidly than almost anywhere else in the UK, jumping from 243,891 in the 2001 census to an estimated 352,005 in 2018, an increase of 44%.
Newham’s mayor, Rokhsana Fiaz, wrote to the chancellor, Sajid Javid, this week following the Conservative election victory. “Of all London boroughs, Newham spends the most on temporary accommodation, a figure of some £61.1m in 2017-18. We have a housing waiting list of over 27,000, and high levels of homelessness in our borough. Truly, the sharp edge of the housing crisis is felt by Newham residents,” she said.
Fiaz is deeply concerned that in the days before the election, the government quietly raised the interest rate for council borrowing by one percentage point, making it more difficult for Newham to finance new council houses.
Meanwhile, looking back over the past year, the fastest-rising prices have not been in London but in the north-east and north-west of England.
In Billingham, Co Durham, average house prices grew by the most, from £192,717 in October 2018 to £216,328 in the same month in 2019, a rise of 12.3%. House prices in the town, birthplace of the Billy Elliot actor Jamie Bell, are around eight times that of the average salary (£26,471).
At the opposite end of the table are many locations around London and the south-east where prices have fallen. In Harrow, north London, prices declined by 3.6% in the year to October 2019, said Halifax.
One area of London manages to appear in both the top 10 over 20 years and the bottom 10 over one year. Prices in Bexleyheath fell by 0.1% over the last 12 months, said Halifax but the Bexley local authority area recorded a gain of 311% over 20 years.
