House prices in tourist hotspots increasingly out of reach for young and low paid

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The FINANCIAL — Rising house prices and private rents mean that some workers are at risk of being priced out of living in rural and coastal areas, contributing to skill shortages in the tourism and hospitality industries that their local economies rely on.

Young and low paid workers in tourist hotspots are increasingly facing the prospect of being unable to afford to live there.

Despite falling from a record high in June, the average UK house price (£256,000) increased by 8.0% in July 2021 compared with the previous year.

House prices were rising at three times the national rate in some rural and coastal areas in July, such as Conwy in North Wales (25.0%), North Devon (22.5%) and Richmondshire in the Yorkshire Dales (21.4%), continuing a trend seen during the coronavirus (COVID-19) pandemic.

Meanwhile, the seven areas that recorded house price falls in July were all London boroughs.

House prices are increasing partly because of temporary changes to taxes paid on property purchases (including Stamp Duty in England and Northern Ireland), but they also reflect a shift in consumer preferences with growth being driven by rural and coastal areas.

Prospective home buyers are seeking more space, with prices for detached houses (9.0% growth in July) consistently rising faster than terraced houses (7.7%) or flats (6.1%).
As a result, people living in rural and coastal areas – particularly the young and those on lower incomes – are at risk of being priced out of the housing market.
This could be contributing to hospitality businesses being unable to fill vacancies, with the industry being predominant in tourist areas and containing a high proportion of young and low paid workers.

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House prices increased fastest in rural and coastal areas in July

Top 10 and bottom 10 local authorities for annual house price growth, UK, July 2021

The divergence in house price growth between London and elsewhere can be seen in tourist hotspots (the local authorities with the highest number of travel and tourism businesses per resident population).

Eden, Powys, and Derbyshire Dales have all posted price rises of 10% or more in every month of 2021 so far (January to July).

While also considered tourist hotspots, City of London, City of Westminster and Camden are the only areas to have seen prices decline for those seven consecutive months.

There is some evidence of people house-hunting in rural areas, rather than in cities, because of a change in their circumstances during the pandemic, such as being able to work remotely.

In September 2020, the Opinions and Lifestyle Survey (OPN) found that 3 in 10 (29%) working adults in Great Britain had intended to continue working from home after the pandemic all or most of the time. Among those people, 12% said they had considered relocating, mostly to rural or coastal areas.

However, while there has been a general pattern of people moving from urban to rural places in recent years, we do not have any data at this stage that suggest a stronger trend during the pandemic.

 

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