Is it a London thing? Analysis of UK and London property prices
- Balvinder Ruprai
- Sep 17, 2023
- 7 min read
So, people in property circles often say that if you want yield, then head north, but for capital growth, you generally want to be in the south (and London in particular). This got me intrigued and especially with interest rates beating prices down in some areas over recent months. I’ve been to a few property courses where presenters made claims like property over the long term UK and London property prices always go up or over any period of x years, you will always make money. Okay great, but is it true? Does it apply to all property types? And just how much is in that north – south divide?
And what’s more, can we look back far enough where we have seen variance in interest rates, inflation and even been through a recession?
Having spent long enough slicing and interrogating data for client work in the past, this got me looking for data to do some of my own analysis and to understand these claims about property a bit better. Especially how price changes play out across the country as well as by property type within my area of interest (East London and West Essex).
This led me to a UK Government website page detailing House Price Index data up to October 2022. There was a lot of data available – some going back to the 1960s in some cases, but with blanks elsewhere, so I’ll lay out the caveats and key points first:
Data is split by boroughs.
Some data points go back to 1960s. Most start at 01/01/1995. Some start much later. This analysis takes 01/01/1995 as the start point. Any boroughs which did not have this date point in there were not included.
End date for data is October 2022
City of London (which consists mainly of EC postcodes) has been included in East London for the purpose of analysis further below.
City of London only has price details for flats (not semi, terraced or detached)
Some data sets hide variances – e.g., Havering has 2–3-bedroom detached properties in more modest posts codes as well as 6-7 bedroom detached properties north of £5m. These types will both be grouped as detached properties in Havering as as such have the average price pulled up or down, whichever way you are looking at it.
TLDR
Too Long Didn’t (or don’t want to) Read…. 🥱
The analysis will break the data down in the bulleted sections below, which if you like graphs and tables more than words, you are welcome to jump straight there:
As the title suggests, London generally came out the better place to buy, but there are some interesting ‘dark horse’ areas in the top ten and top twenty. It is worth noting that in a world where crypto currencies come and go faster than UK prime ministers and exchange listed companies go bankrupt – all the UK boroughs reviewed were up over the time-period reviewed. This data shows that property as an asset class is the winner. All boroughs showed positive price changes and the least impressive price change was by 230%. For optimal returns, the devil here is going to be in the detail (… data), which we will dive into below.
As an aside, when the data set was being whittled down to borough and percentage change ranked, distant memories started to emerge. This seemed all too familiar and reminded me of university application days. For those not familiar with the UK university rankings, the Times (The UK newspaper) would publish UK university league tables and you would naturally want to see your university (or the ones you are applying to) ranked as highly as possible. I am not sure what went in to derive those rankings, but it became a bit of a reference to measure a university against.
There were other rankings available too which further sliced this data into more discrete dimensions to produce more focussed league tables (e.g., by subject or research funding) which were useful if you managed to find your college ranked higher there and wanted to argue the uselessness of the main rankings table.
Then there were the other universities….
Damn it… Can’t you rank in the top ten for anything ..?!
All UK boroughs ranked.
Approach:
All boroughs kept in scope except where no data available as at 01/01/1995
First and last price points taken; difference measured as a percentage of change (i.e., from 1995 – 2022)
Average price used as the basis for comparison.
Region Name | Percentage Change |
|---|---|
Hackney | +963% |
Brighton and Hove | +822% |
City of London | +816% |
Hastings | +768% |
Waltham Forest | +752% |
Southwark | +720% |
Haringey | +720% |
City of Bristol | +718% |
Lambeth | +717% |
Tower Hamlets | +709% |
Inner London | +707% |
Brent | +705% |
Islington | +701% |
Thanet | +697% |
Newham | +691% |
Lewisham | +669% |
Hinckley and Bosworth | +664% |
Southend-on-Sea | +653% |
Wandsworth | +649% |
Kensington and Chelsea | +642% |
Basildon | +636% |
City of Westminster | +627% |
Adur | +624% |
Greenwich | +616% |
Reminder that this is using average prices, but it is quite impressive to say using average prices, all properties went up over that period.
There were a total of 364 boroughs in this data set (mainly covering England).
Taking a look at the last 25 they are all very outside of London and include many areas where investors start their property journey. Contrasting with the top 25 area included 16 London boroughs, 7 areas which had a coast and two which had neither. Arguably Basildon is within commuting distance to London and with prices in London rising as they have been (and good transport links) there is an outflow into suburbs and beyond.
Region Name | Percentage Change |
|---|---|
Bradford | +327% |
Ripple Valley | +326% |
Scarborough | +322% |
Tyne and Wear | +322% |
St Helens | +321% |
Burnley | +319% |
North East Lincolnshire | +313% |
South Ribble | +311% |
Hyndburn | +302% |
Sunderland | +294% |
Flyde | +293% |
City of Kingston upon Hull | +292% |
South Tyneside | +286% |
Darlington | +286% |
Gateshead | +279% |
Preston | +274% |
Wyre | +272% |
Stockton-on-Tees | +268% |
Carlisle | +264% |
Middlesbrough | +263% |
Redcar and Cleveland | +259% |
County Durham | +245% |
Blackpool | +240% |
Hartlepool | +230% |
Although London did not feature in the last 25 ranked areas, we still see Hartlepool (the worst performer) registering gains of over 200%.
All UK boroughs ranked post 2008-09 recession.
So London dominated in a point to point challenge for where most data was available. When we look at which area recovered best post 2008 financial crisis, that is from August 2009 to October 2022 we see some recurring areas and London very much leads again in this case.
Approach:
All boroughs kept in scope except where data is available as at 01/08/2009
First and last price points taken; difference measured as a percentage of change (i.e., from 2009 – 2022)
Average price used as the basis for comparison.
Region Name | Percentage Change |
|---|---|
City of London | +161% |
Waltham Forest | +160% |
Hackney | +135% |
Hastings | +131% |
Barking and Dagenham | +128% |
City of Bristol | +128% |
Thanet | +125% |
Lewisham | +125% |
Newham | +122% |
Haringey | +122% |
Brent | +122% |
Thurrock | +121% |
Medway | +120% |
St Albans | +119% |
Merton | +118% |
Adur | +118% |
Basildon | +117% |
Croydon | +116% |
Bexley | +116% |
Castle Point | +116% |
North Northamptonshire | +116% |
Rochford | +116% |
Greenwich | +115% |
Kingston upon Thames | +115% |
In fact East London occupies the top three spots with Barking and Dagenham and Newham not too far behind. Interestingly Hastings, Thanet and the City of Bristol are also up there. There must be something in people wanting to get out to coastal areas (or AirBnB in those areas?)
There was a bit more of a shakeup in the last 25 in this table which is showing a clearer divide between London (and some other areas in the South) versus the north, Northern Ireland, and parts of Scotland. Saying that, once again, you would probably would have done better than keeping that money in the bank.
Region Name | Percentage Change |
|---|---|
South Tyneside | +35% |
Dumfries and Galloway | +34% |
Preston | +33% |
Darlington | +32% |
Sunderland | +31% |
County Durham | +30% |
Mid Ulster | +30% |
Derry City and Strabane | +30% |
Gateshead | +29% |
Middlesborough | +29% |
Hartlepool | +28% |
Inverclyde | +28% |
North Ayrshire | +27% |
Fermanagh and Omagh | +27% |
City of Aberdeen | +27% |
Armagh City Banbridge and Craigavon | +26% |
Lisburn and Castlereagh | +26% |
Newry Mourne and Down | +26% |
Northern Ireland | +24% |
Antrim and Newtownabbey | +22% |
Aberdeenshire | +20% |
Belfast | +20% |
Mid and East Antrim | +17% |
Ards and North Down | +14% |
East London and West Essex by property type
We’re starting to see a bit of a trend and returning to the original questions; we can probably draw two conclusions at this point:
1) You’re probably going to do okay with property.
2) You’re more likely to do better in London.
With London (and especially East London) doing well in both tests above, there could be merit in breaking down that data a little further, just like those university ranking tables. This time taking East London and West Essex boroughs:
Newham, Barking and Dagenham, Redbridge, Chelmsford, Havering, Basildon, Hackney, Waltham Forest, City of London, and Tower Hamlets
Creating a composite of equal weighting by property type (flat, detached, semi and terraced) and seeing how each type performed over that period against each other. That is, would you have done better with a flat, or semi-detached? Have prices for all types moved in tandem over time?
Once again, using 1995 as the starting point and going through to 2022, taking one price point per year and rebasing for comparison, we see some of what we probably expected:
A varying increase into about 2006-7;
A sharp increase into 2008;
Followed by a sharp reversal in price
Only for a recovery which then accelerated in 2013-14.
A plateau just after 2016
Prices took off again in 2020
Looking at this by property types:
All property types ‘generally’ moved in tandem (up and to the right).
A steeper gradient going into the 2008 recession (remember 125% mortgages and buying overpriced off plan in Manchester?)
However, some interesting trends emerge too:
Around 2002-3 we see detached properties losing pace on their rate of increase. This gap only increased over time and only overtook flats – which went on their own path sometime after 2016.
Just before then and leading into the 2008 recession (the GFC), flats has been leading all other property types – a trend that started to lose steam after the GFC.
Just after 2016 we see the rate of increase of flat prices break away altogether from the trend and even fall behind the long-term laggard (detached properties). Flat prices saw a small decline going into 2020 which did pick up again, although the gradient didn’t seem to keep up with the other three property types.
Semi-detached and terraced homes looked to have returned the biggest bang for your pound. Keeping up with flats going into the GFC and then leading the pack right up to the end of the data set.
Point 5 is an interesting one for me since I’ve been a fan of buying flats and have done well from them. There could be many reasons for this price deviation trend which would require a separate piece of analysis itself. There are also value uplift strategies, which if done via BRR, may not appear in the data at all.
It would also be interesting to revisit this analysis after a year to see if flats (and detached) form their own path while semi-detached and terraced go their own way.
The winner? (and what does this tell us about UK and London property prices?)
Can you find another asset class, for which over a long enough time, all the constituents come out winners?
In short:
For optimised gains, aim for London.
If you are waiting for the next recession to hit, target East London for great uplift.
If you want the greatest gain in East London, go with terraced and semi-detached.
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