Posted: Wed Aug 13, 2008 5:14 pm
I had to share this with you, it's extraordinary
http://money.uk.msn.com/mortgages/mortg ... id=7503555
Cities in northern England are beyond saving and residents should move south, a new report from the Policy Exchange think tank argues.
Urban regeneration in the north is failing its citizens so much that only a mass migration to London, Cambridge and Oxford would free them from poverty.
To support this exodus, the report argues more affordable homes should be built and that planning restrictions should be relaxed.
"No-one is suggesting that residents should be forced to move, but we do argue that they should be told the reality of the position: regeneration, in the sense of convergence, will not happen, because it is not possible," the report concludes.
But is life really that bad up north? MSN Money's columnists explain why life in the north is still better than the south.
Life is great up north
Beautiful scenery, friendly people, more space and cheaper property. These are just a few of the reasons that many people like to live in the north of the country.
While the south-east may be the recent engine of the British economy (though we should never forget where the industrial revolution started) it's up here that the quality of life is great.
I live on the edge of the rolling chalk land of the Lincolnshire Wolds (yes, this county really does have hills) but can also drive to the beach in 20 minutes on empty roads. When I get there, even on an August bank holiday, I'd be surprised to see more than a dozen other people. My house here cost me two-thirds of what I raised by selling a much smaller flat in London in 2000.
My property experience is not untypical. The average detached home in East Lindsey, the district I live in, costs £200,000. For Greater London, the figure is almost four times as much.
Look for the posh northern pockets
Still, the north does have its posh pockets. According to Land Registry figures, the average price of a terraced house in York at the end of 2007 was £192,000, almost twice what you would pay for one in Liverpool, though still only half what you would typically pay in London. In Surrey a terraced house would cost £273,000.
Housing in the north remains distinctly more affordable than in the south. Though wages are lower, prices are in general much lower. Still, it's more like "less unaffordable" than genuinely affordable.
Affordable? Not completely
The Royal Institution of Chartered Surveyors (Rics) affordability index, set so the year 1996 equals 100 for measuring incomes and house prices, has risen to 178 in the north-east, the most affordable region in the north, compared with 223 in London. In other words, it's more of a struggle everywhere to get on the housing ladder than it was in 1996, but a little less onerous in the north.
Across the country, the typical house in 2008 costs 5.1 times the income of the average household, up from 3.8 times in 2003.
Prices beginning to sag
Northern Ireland has for years the best performing property area as the realisation sank in that The Troubles were truly over. Top of the pile was Armagh, where the average cost of a home soared by 331% to £220,229 between 1997 and 2007, according to the Halifax.
Martin Ellis, Halifax chief economist, said: "The counties recording the best house price performance over the past 10 years have mainly been outside southern England."
Prices are beginning to fall in the north, but not strongly. Northern estate agency Reeds Rains first noticed a fall in prices across the region in July 2007, with Manchester, east Lancashire and south and west Yorkshire being hit first.
"In the last two years the south has outperformed the north in terms of prices," said Martin Gahbauer, senior economist at Nationwide Building Society. "That was a reversal of the trend earlier in the decade, around 2003-04," he added.
"We think the north will be a bit weaker than the south in 2008, because there are fewer supply constraints (in building new homes)," Gahbauer said.
Gritty situation for northern landlords
Life up north may be getting tougher for landlords too. Over the past decade 2.5 million people have moved from elsewhere in the country to the south east, according to the Halifax.
Figures from Rics show that while tenant demand is overall reasonably strong in the country, it is far weaker in the north than the south. Yields (that is, the rent as a proportion of the value of a property) are stable, but if tenant demand weakens too much, landlords may need to cut rents to ensure they don't have too many vacant months.
For landlords, the big worry would be a rise in unemployment. However, unlike previous economic downturns the pressure today is on financials, banking and services, which are mainly in the south, rather than manufacturing whose strength is more in the midlands and the north.
"Manufacturing has been holding up better than services," Gahbauer noted.
North aided by weaker pound
The weaker pound against the euro is strengthening northern industrial competitiveness, while the south struggles with the knock-on effects of the US subprime crisis.
There are always exceptions, though. Northern Rock, the most iconic employer in the north-east, has been the largest UK victim of that banking crisis so far. With tens of thousands of jobs at stake in Newcastle, it probably just goes to show that whether you live in the north or south, you can't insulate yourself from the global economy.
http://money.uk.msn.com/mortgages/mortg ... id=7503555
Cities in northern England are beyond saving and residents should move south, a new report from the Policy Exchange think tank argues.
Urban regeneration in the north is failing its citizens so much that only a mass migration to London, Cambridge and Oxford would free them from poverty.
To support this exodus, the report argues more affordable homes should be built and that planning restrictions should be relaxed.
"No-one is suggesting that residents should be forced to move, but we do argue that they should be told the reality of the position: regeneration, in the sense of convergence, will not happen, because it is not possible," the report concludes.
But is life really that bad up north? MSN Money's columnists explain why life in the north is still better than the south.
Life is great up north
Beautiful scenery, friendly people, more space and cheaper property. These are just a few of the reasons that many people like to live in the north of the country.
While the south-east may be the recent engine of the British economy (though we should never forget where the industrial revolution started) it's up here that the quality of life is great.
I live on the edge of the rolling chalk land of the Lincolnshire Wolds (yes, this county really does have hills) but can also drive to the beach in 20 minutes on empty roads. When I get there, even on an August bank holiday, I'd be surprised to see more than a dozen other people. My house here cost me two-thirds of what I raised by selling a much smaller flat in London in 2000.
My property experience is not untypical. The average detached home in East Lindsey, the district I live in, costs £200,000. For Greater London, the figure is almost four times as much.
Look for the posh northern pockets
Still, the north does have its posh pockets. According to Land Registry figures, the average price of a terraced house in York at the end of 2007 was £192,000, almost twice what you would pay for one in Liverpool, though still only half what you would typically pay in London. In Surrey a terraced house would cost £273,000.
Housing in the north remains distinctly more affordable than in the south. Though wages are lower, prices are in general much lower. Still, it's more like "less unaffordable" than genuinely affordable.
Affordable? Not completely
The Royal Institution of Chartered Surveyors (Rics) affordability index, set so the year 1996 equals 100 for measuring incomes and house prices, has risen to 178 in the north-east, the most affordable region in the north, compared with 223 in London. In other words, it's more of a struggle everywhere to get on the housing ladder than it was in 1996, but a little less onerous in the north.
Across the country, the typical house in 2008 costs 5.1 times the income of the average household, up from 3.8 times in 2003.
Prices beginning to sag
Northern Ireland has for years the best performing property area as the realisation sank in that The Troubles were truly over. Top of the pile was Armagh, where the average cost of a home soared by 331% to £220,229 between 1997 and 2007, according to the Halifax.
Martin Ellis, Halifax chief economist, said: "The counties recording the best house price performance over the past 10 years have mainly been outside southern England."
Prices are beginning to fall in the north, but not strongly. Northern estate agency Reeds Rains first noticed a fall in prices across the region in July 2007, with Manchester, east Lancashire and south and west Yorkshire being hit first.
"In the last two years the south has outperformed the north in terms of prices," said Martin Gahbauer, senior economist at Nationwide Building Society. "That was a reversal of the trend earlier in the decade, around 2003-04," he added.
"We think the north will be a bit weaker than the south in 2008, because there are fewer supply constraints (in building new homes)," Gahbauer said.
Gritty situation for northern landlords
Life up north may be getting tougher for landlords too. Over the past decade 2.5 million people have moved from elsewhere in the country to the south east, according to the Halifax.
Figures from Rics show that while tenant demand is overall reasonably strong in the country, it is far weaker in the north than the south. Yields (that is, the rent as a proportion of the value of a property) are stable, but if tenant demand weakens too much, landlords may need to cut rents to ensure they don't have too many vacant months.
For landlords, the big worry would be a rise in unemployment. However, unlike previous economic downturns the pressure today is on financials, banking and services, which are mainly in the south, rather than manufacturing whose strength is more in the midlands and the north.
"Manufacturing has been holding up better than services," Gahbauer noted.
North aided by weaker pound
The weaker pound against the euro is strengthening northern industrial competitiveness, while the south struggles with the knock-on effects of the US subprime crisis.
There are always exceptions, though. Northern Rock, the most iconic employer in the north-east, has been the largest UK victim of that banking crisis so far. With tens of thousands of jobs at stake in Newcastle, it probably just goes to show that whether you live in the north or south, you can't insulate yourself from the global economy.