Areas with low unemployment see house prices rise by almost £65,000 since 2009

18 May 2015

  • House prices in the 20 areas with the lowest unemployment rates rise by almost £65,000 since 2009
  • 20 areas with the highest unemployment record average house price increase of just £4,000
  • Ten areas with the highest levels of employment have seen an average house price rise of 23% since 2009; 35% higher than the Great Britain average of 17%

Homeowners in local authorities with the lowest levels of unemployment have seen the value of their property rise by almost £65,000 since the trough of the last housing market cycle in 2009, according to new research by Lloyds Bank.

The average house price in the 20 local areas that recorded the lowest unemployment rate between 2009 and 2015 rose by 25%, or £64,783. In contrast, the 20 areas with the highest unemployment experienced an average house price increase of just £4,100 (or 3%). 

There is a clear link between levels of unemployment and house price performance in recent years. Those areas with the lowest average levels of unemployment since 2009 – as measured by the claimant count - have, on average, recorded bigger house price gains. For example, the 20 local authority districts with the lowest unemployment have experienced average house price rises of 25% since 2009 compared with an increase of 17% for Great Britain as a whole.  [Table 1]

The outperformance is more marked once the impact of London is removed from the calculations with Great Britain excluding London recording an 11% price increase. (The capital has seen the biggest price gains in recent years but none of the lowest 20 unemployment areas are in Greater London.)

The position for the ten areas with the lowest levels of unemployment is even more marked with an average house price rise of 28% for these areas since 2009; more than 60% higher than the Great Britain gain and 150% more than Great Britain excluding London. Hart and Winchester, which have had the lowest average unemployment rates since 2009, have recorded house price gains of 33% and 37% respectively in the last six years.

Similarly, those areas with the highest levels of unemployment have typically underperformed compared to the Great Britain average. The 20 areas with the highest levels of unemployment have recorded an average house price gain of 3%. Hull and Middlesbrough – the two areas with the highest unemployment – have seen house prices increase by only 2% and 1% respectively over the past six years. [Table 2]

Employment

There is also a strong association between levels of employment and house price performance over the past few years. Those areas with the highest average levels of employment since 2009 have, on average, recorded bigger house price gains. The 20 local areas with the highest employment rates have experienced average house price rises of 19% since 2009 compared with an increase of 17% for Great Britain as a whole (11% excluding London).  [Table 3]

The relationship between employment and house prices has been even stronger for the ten areas with the highest levels of employment with an average house price rise of 23% for these areas since 2009; 35% higher than the Great Britain gain and more than 100% more than Great Britain excluding London. The Shetland Islands, which has had the highest average rate of employment since 2009, has seen house prices rise by 31%.

Similarly, those areas with the lowest levels of employment have typically underperformed the Great Britain average. The 20 areas with the lowest levels of employment have recorded an average house price gain of 9%. Moreover, the only three areas that have seen higher than Great Britain average price rises are all London boroughs – Newham, Tower Hamlets and Barking & Dagenham. The average price rise for the other 17 areas with the lowest employment have seen an average house price increase of only 2%; well below the national average (with or without London). [Table 4]

Andy Hulme, Lloyds Bank Mortgages Director, said:

"There has been a very clear relationship between conditions in the local jobs market and house price performance during the period since the housing market downturn between 2007 and 2009. Those areas with low unemployment and high levels of employment have tended to record above average house price growth. Areas with high unemployment and relatively low employment have, on the other hand, typically underperformed.

“The past few years have underlined the importance of local economic health in determining house price behaviour. Other factors, however, are also key drivers of house price trends including the strength, or otherwise, of housing supply.”