The towns where house prices NEVER recovered
Parts of London have seen prices double in the last decade, but one in four towns is still suffering
TEN years on from the Financial Crisis, house prices across many parts of the UK have yet to recover – and swathes of Scotland are among the hardest hit.
Analysis shows that, in one in four major towns and cities, the average property price is lower than it was a decade ago.
Many homeowners continue to struggle with negative equity because the mortgage they took out in the lead-up to the economic crash is still larger than the value of their home.
And those affected are not all in areas you would expect. It has been well-documented that prices in some towns such as Middlesbrough and Blackpool are still struggling to bounce back even a decade on.
But homeowners living in beauty spots such as Cornwall, the Lake District and rural Scotland are also still feeling the effects.
Research shows average house prices in the local authority of Argyll and Bute have fallen from £141,200 in June 2007 to £134,700 in June 2017.
In Dumfries and Galloway, prices have dropped from £131,200 to £119,500. In Inverclyde, they have fallen from £114,100 to £103,200, and in South Lanarkshire they are down from £123,500 to £119,800.
Meanwhile, prices have doubled in parts of London since the pre-Crisis peak. The value of average property in Kensington and Chelsea has shot up from £723,600 in June 2007 to £1,405,500 this June.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, says: ‘After the Crisis, low interest rates and easy access to loans saw demand rise again in areas where the economy recovered quicker.
‘But in areas which do not have the same industrial muscle, we see a very different picture. This includes manufacturing towns in the north but also some less obvious coastal and rural areas.’
Analysis shows that, out of 60 major UK towns and cities, 17 still have lower average house prices than they did in 2007. This equates to one in four towns — or 28 per cent — according to research by estate agent HouseSimple.com.
It compared average house prices from June 2007 to June 2017 using Office for National Statistics data.
Blackpool was the worst-affected town with house prices still 15 per cent below their June 2007 level.
Sunderland followed, with prices 13 per cent lower, and in Middlesbrough 10 per cent.
In the North-West, Liverpool, Blackburn, Bolton, Preston and Rochdale are all still struggling, while Bradford, Doncaster and Rotherham, in Yorkshire, also feature on the list. Average prices in Swansea and Newport in Wales remain down on the 2007 value.
NHS administrator Stacey FlinnScholfield and her husband Paul were forced to sell their home at a loss last year after house prices failed to recover from the crash.
In 2005, the couple took out a 100 per cent mortgage to cover the £97,500 cost of their two-bedroom terrace in Bradford.
Average house prices there had surged between 2005 and 2007 from £98,000 to £140,000, but had plunged to £111,000 by 2013.
In 2010, the couple needed to move closer to Paul’s army barracks in Catterick, North Yorkshire, but they had no equity to put down as a deposit.
In the end they were forced to let their home and move into rented Army accommodation. Finally last year, with no sign Bradford house prices would recover anytime soon, they cut their losses and sold their home for just £90,000 – £7,500 less than they bought it for.
Stacey, 33, says: ‘When we bought the house I was only 22. We took bad advice and got a 100 per cent mortgage. We thought we would live in the house for five years, make a bit of money on it then move somewhere bigger.’
Stacey, who has a five-year-old son called Bear, adds: ‘In hindsight, we should have waited until we had saved for a deposit. Ten years on, we are still feeling the effects of that decision.’
Alex Gosling, chief executive of HouseSimple.com, says: ‘The past decade has been a golden period for many UK homeowners, particularly in the South, who have sat back and watched the value of their homes rise to record levels.
‘Unfortunately there are pockets of the UK where property prices are literally stuck in the past — homeowners stuck in negative equity since 2007.
‘It must be galling for anyone who bought a property ten years ago, at the top of the market, and their home today is worth less.’
Andrew Montlake, of mortgage brokers Coreco, says: ‘For any borrowers that do find themselves in negative equity the important thing is not to panic as it is only really an issue if you need to sell your property or cannot afford the mortgage payments.’