Housing affordability in the UK’s “new towns” has improved for the first time since the start of the current economic crisis.
According to banking giant Lloyds TSB, the average price for a home in a new town, urban conurbations that grew rapidly through population dispersal following World War II, is currently £182,354 – 6.1 times the gross annual average salary, down from 6.3 last year and well below the 6.9 national average.
According to Lloyds TSB, the improvement was created by improved earnings in the area, coupled with lower house prices.
The bank said that in the last five years there has been an increase in average earnings of 9 per cent in new towns, while house prices in the areas have remained predominantly static, showing just a 1 per cent increase. Meanwhile, house prices in new towns are, on average, 5 per cent lower than the national average of £230,325.
Slower than average
House prices in new towns have also increased slower than the national average over the last 10 years. Since 2002, the average house price in a new town has increased by 74 per cent from £105,000 to £182,000, compared with a 92% rise in England and Wales as a whole.
Lloyds TSB housing economist Suren Thiru said: “Many new towns are within easy commuting distance of major commercial centres, where housing is typically more expensive.
Thiru added that the combination of strong earnings growth and lower priced property, together with good accessibility to the capital, has helped to support prices in many new towns in the south east during the economic and financial downturn.
Hatfield (14 per cent) and Welwyn Garden City (8 per cent) have both shown increases and are the two least affordable new towns, at over eight times the gross annual average earnings in the area.
Drops
Outside of the south east, only Skelmersdale in Lancashire has shown price growth (7 per cent), while there were drops as high as 14 per cent, in Newtown, Powys and 12 per cent in Corby, Northamptonshire.
Corby has also shown the greatest improvement in housing affordability since Autumn 2007, with the average house price falling from 6.2 times higher than average gross annual income to just 4.8 times.
Peterleee, County Durham is considered to be the most affordable new town, with the average house price of £86,427 3.2 times gross average annual earnings.
