House prices and unemployment are a story of linked fortunes. A recently released study showed property prices in the North East may have been held back by the regions high unemployment rates.
The Lloyds Bank study found property prices in parts of the UK with high unemployment rose slower over the past six years than those in areas with more people in work.
The highest performing area, South Cambridgeshire, which has unemployment rates of just 1.3 per cent, saw price rises of a staggering 48%.
But in 20 areas where unemployment rates are the highest, the average rise was just £4,000. In some places, such as South Tyneside, prices actually fell. Middlesbrough saw a rise of just one per cent, but Hartlepool and Redcar and Cleveland performed better with rises of nine per cent and 14 per cent respectively.
The Lloyds research looked at the situation from 2009 to 2015. But, new Land Registry data, shows a bleaker picture month-by-month for the region. In April, compared to the previous month, Middlesbrough had the biggest fall in the country at 7.6 per cent. Stockton prices fell by 6.8 per cent and those in Darlington dropped by 5.7 per cent.
It is no surprise that such a direct correlation has been found between employment and house prices. Those struggling to find a job will not be able to get onto or move up the property ladder. Even those in employment may not be feeling confident enough to make such a big investment.
Latest figures show the unemployment rate in the North East stands at 7.5%. The number of people out of work fell by 7,000 in the last quarter, although the North East still has the highest number of unemployed in the country.
But, analysts have quite rightly pointed out there is capacity for house price growth in the North East, provided that the economic conditions are right. And, it does appear they are heading in the right direction.
The North East was the standout performer in separate research, also by Lloyds, based on replies from purchasing executives, which showed the fastest overall increase in business activity was recorded in the region.
This region is also continuing to buck the national trend when it comes to export growth, with the total value of goods sold overseas in the North East rising by 7.2 per cent last year, compared to a fall of 3.9 per cent nationally. Regional success stories include Burnopfield-based restoration business Furniture Clinic, which recently announced an 80 per cent jump in overseas sales.
With the Northern Powerhouse initiative, led by Stockton MP James Wharton, promising to help redress the North-South economic imbalance and attract investment in northern cities and towns, the foundations have been laid for economic growth. While unemployment rates remain high, the jobless rate is actually falling faster in the North East than anywhere else in the country.
So, with everything in place for unemployment rates to continue to fall, we may well start to see larger house price rises in the coming years. For those in a position to do so, now could be a wise time to buy.
Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 40 people serving private and corporate clients. For further information: www.latimerhinks.co.uk or call 01325 341500.
Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise.
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