House price performance in inner London and northern Scotland are significantly better and these are areas with better employment records, according to new research from Lloyds Bank.
Local authorities with the largest falls in the unemployment rate have seen the value of properties rise by almost £136,000 over a decade, the research says.
The average house price in the 10 local areas that recorded the largest falls in the unemployment rate in the decade to March 2014 rose by 68%, or £198,709 to £334,404 while the unemployment rate in these areas fell by 1.3% during the period.
The rise in house prices in the 10 top performing employment locations over the past decade is split between areas of northern Scotland and inner London. In the Shetland Islands the average house price has more than doubled, up by 104%, in the past decade to £153,782.
The Shetlands is followed by Hackney with growth of 84%, Southwark and the Western Isles both with growth of 78%, Lambeth at 76% and Tower Hamlets at 72%.
All of these areas have seen their unemployment rate fall by between 1.1% and 1.8% since 2004 and have outperformed the rest of the country as a whole, with UK average property prices growing by 22% or £36,482 to £199,039 over the same period, whilst the national unemployment rate is 0.5% higher.
At the other end of the spectrum the top 10 areas with the lowest house price performance and a higher unemployment rate are generally concentrated in Northern Ireland and outside southern England.
These areas include Lisburn in Northern Ireland where the average house price has grown by 5% to £121,310 in the past decade, followed by Craigavon in County Armagh at 9%, Belfast at 14%, Newport in south east Wales at 15% and Blackpool at 19%.
The top 10 areas with the lowest price performance have an unemployment rate that is on average 2.2% higher now than in March 2004.
During the recent recession that lasted from the second quarter of 2008 to the third quarter of 2009 most areas in this survey recorded a contraction in the average house price, even in areas where the unemployment rate only rose marginally, the research also shows.
In the top 10 areas where the unemployment rate showed the smallest increase during the recession, house prices still contracted by an average of 10%. In Gwynedd prices fell on average by 20%, followed by West Dorset at 18%, Moray at 17%, Ceredigion at 11% and Copeland at 10%.
In contrast, local authorities with the largest rise in the unemployment rate during the recession also recorded some of the sharpest falls in average property values. In Craigavon prices fell on average by 27%, followed by Blaenau Gwent at 23%, Rotherham and Hull both at 21% and Walsall at 20%.
The research report says that falling unemployment in the past year has been one of the factors helping the outlook for house prices. In the 10 areas with the largest fall in the unemployment rate since March 2013 the average house price has grown by 8%.
Areas with the largest increases include Middlesbrough at 12%, Hull at 11%, Barking and Dagenham, Peterborough and Oldham all at 10%. In these areas the claimant count unemployment rate has fallen on average by 2% during the year.
‘In general, house price growth over the past decade has been stronger in the areas that have seen the biggest falls in the unemployment rate as measured by the claimant count. Areas in northern Scotland and inner London have generally outperformed other areas on both house price performance and a lower unemployment rate,’ said Nitesh Patel, housing economist at Lloyds Bank.
‘During the recession of 2008 to 2009 property values fell across most areas, even where the unemployment rate rose only marginally. This does highlight that while unemployment is important there are also other factors that drive house prices, such as affordability, earnings growth and low housing supply which will have contributed to rising prices in the earlier year,’ added Patel.
