Member Article

Is unemployment holding back North East house prices?

A study shows North East house prices may have been held back by the region’s above average unemployment rates – despite joblessness in the region recently falling by 25%.

Figures from Lloyds Bank show property prices in parts of the UK with high unemployment have risen much more slowly over the last 6 years than prices in areas with low unemployment.

The unemployment rate in the North East currently stands at 7.5% - down 2.5 since last year but still 25% higher than the national rate of 5.6%.

House prices have risen by an average of £65,000 in places like Winchester, Dorset and Surrey where unemployment rates are the lowest, but by only £4000 in the 20 areas where it is highest. These areas include Middlesbrough, Hartlepool, South Tyneside and Redcar.

Research from the same organisation however shows the North East currently has highest rate of business activity in the UK, with the region clocking up business activity rate of 62.4 compared to a national rate of 59.

The region is also bucking the national trend with continuing export growth, with the total value of goods sold overseas in the region rising by 7.2% last year, compared to a 3.9% fall nationally.

Research from the University of Sheffield has, however revealed that over 6 times as many public sector jobs have been lost in the North East compared to London since 2008.

Property expert Ajay Jagota, founder and Chief Executive Officer of the North East’s most innovative sales and lettings business KIS, responded to the figures.

The property firm is famous for being the first letting agents in the UK to abolish deposits, replacing them with a one-of-a-kind landlord insurance policy offering guaranteed rent, deposit replacement, legal assistance and round the clock third party emergency home repairs

He said: “It might seem like it’s stating the obvious to say that house prices are lower where less people are in work, but these figures show a deeper truth about the North East economy - and in particular why our region needs to have more power transferred to it from London.

“Unemployment is falling in our region, but is still the highest in the country by a considerable margin. It’s little coincidence that we’ve lost 6 times as many public sector workers than the rest of the UK.

“This shows to me that a good deal more rebalancing is needed in our local economy. And who best to do that but ourselves? Regional-specific issues clearly cannot be dealt with by Westminster.

“There’s a lot to be proud of in our economy right now, high exports, high business activity and falling unemployment. If unemployment does lead to lower house price growth, a housing boom could be just around the corner.

“But that depends on how we build on our recent progress. The North East economy is currently at what I call the ‘proving’ stage. It might not look like it’s doing all that much, but kept in the right conditions and it could double in size before your eyes. For me, one of those conditions is greater economic autonomy.”

This was posted in Bdaily's Members' News section by Ajay Jagota .