■ Price differentials across the regional housing markets of England and Wales can partly be put down to the nature and size of housing stock in local markets. This is reflected in the relationship between the amount of detached and terraced housing stock in particular.

■ In the highest value housing markets of each region, detached housing makes up 39% of all housing, with the average house having 6.5 rooms. In the lowest value markets of each region, the figures fall to 9% detached housing and 5.0 rooms per property.

■ However, even accounting for these factors, there are big variations in prices between different tiers of the market in each region. Nowhere is this more evident than in London, where the relationship between house type, size and corresponding value is much less clear than elsewhere.

■ In London the average value in the most expensive markets equates to over £262,000 per room, whilst in the lowest value markets it is below £43,000 per room. By contrast, in the North East the highest value housing markets have an average house price equivalent to £39,000 per room, whilst the lower value markets average under £15,000 per room.

■ Cost per household member shows a similarly wide range, varying from £31,500 to £106,000 in the North East and £63,000 to £264,000 in the South East. In the most expensive parts of London the average cost per household member is over £560,000.

■ These differentials in the localised value of privately owned housing are driven by the relative attractiveness of an area to different socio-economic groups and those employed in high earning employment sectors.

■ These factors, together with the availability of social housing, can dictate the ability of lower earning families from lower socio-economic groups to live within different areas and the basis upon which they occupy housing when they do so.

■ In the most expensive markets of each region, 47% of workers are employed in managerial, professional and administrative functions, whilst in the lowest value housing markets 35% are employed in routine or semi routine jobs.

■ This is also reflected in the dominant sectors of employment. Those in professional, scientific & technical industries, information & communication sectors, education and financial & insurance services are all increasingly important in high value markets.

■ However, the dominance of financial and insurance service workers in the highest value markets of London, means that levels of those employed in education in the capital peak in mid-tier markets. A similar trend is seen by those in public administration across the other regions.

■ In the most expensive markets of London those in the professional, scientific & technical and financial & insurance services sector make up 34% of all those economically active, much more than in other high value areas across the country.

■ Generally, household composition does not change dramatically across different tiers of the market, though there are higher proportions of single person households and couples without children in higher value markets. In London this trend is much more pronounced.

■ This means, in more affluent markets there are higher numbers of rooms per household member. On the one hand, this means households are more able to meet their requirement for space, but on the other, it will reflect higher levels of under-occupation. Across London this much less evident, there being much less space per household member.

■ In the most expensive regional markets there are 2.8 rooms per household member, a figure which falls to 2.1 rooms per household member in the least expensive markets. Figures in London range from 2.1 rooms per household member to 1.7.

■ In most regions, higher value markets have higher levels of owner occupation, whilst lower value markets have higher values of both social and private renting.

■ However, in London higher value markets have considerably higher levels of private renting. This reflects historically high levels of investor activity in these markets, the presence of households for whom private renting is the tenure of choice and the prohibitive cost of home-ownership for middle tier households.

■ In the most expensive markets across the regions, 39% of all housing is un-mortgaged owner-occupied stock with just 10% of housing in the social rented sector.

■ By contrast, in the least expensive markets only 22% of all housing is held by owner occupiers without a mortgage, whilst social housing makes up 27% of the housing stock.

■ Critically, the socio-demographic make up in different tiers of each regional housing market impacts on the amount of housing equity attracted to different tiers.

■ This is reflected in the relationship between unmortgaged and mortgaged stock within the owner occupied sector. Across all regional housing markets higher value wards have much higher levels of mortgage free home ownership relative to mortgaged home ownership.

■ Across all of the regions there is 30% more unmortgaged owner occupied stock than mortgaged owner occupied stock, whilst in the lowest value markets there is 22% less.

■ The results indicate the highest proportionate levels of housing equity in South West England, where transaction levels in this market are highest relative to their pre crunch norm. They also indicate lower proportionate but higher absolute levels of housing equity in London in all but the highest tier of the housing market.

■ Over the past 10 years the shift towards private renting and away from mortgaged owner occupation has been greatest in the lowest value tiers of the market, where households have struggled to access home ownership on the one hand without any visible social housing provision on the other.

■ Levels of private renting doubled in the lowest tier of the regional markets, increasing by over 90% in the bottom 50% of ward groups in 10 years. Even in the most valuable regional markets it has risen by 40% in the period 2001 to 2011.

■ This tenure shifts, together with trends on transactions and changes in the average sale price in the period post credit crunch indicate that the housing divide is widening.

■ In the bottom tier of the market across all of the regions, transaction levels remain 58% below the five years pre crunch. In the lowest value segment, namely the lowest tier of the market of the North East, they have struggled to rise above one third of their pre crunch level.

■ The average sale price in the most valuable wards of London has increased by some 65% since the run up to the credit crunch. At the other extreme, the average sale price in the lowest tier of the market of North East England is currently some 19% below its pre downturn level.

Taken from
Spotlight: A Housing Market Divided