Housing affordability for residents in England and Wales’s New Towns, which were created initially to disperse the population following World War II, is at its most favourable since the financial crisis began in 2007, according to research.
However, house prices in New Towns have increased more slowly than the national average over the past 10 years, the study from Lloyds TSB shows.
Since 2002, the average house price in a New Town has increased by 74% from £105,000 to £182,000 in 2012. This compares with a 92% rise in England and Wales as a whole.
Two of the three New Towns recording the biggest price gains over the past decade are in Wales. Newtown recorded the largest increase at 104% followed by Cwmbran in Gwent at 96%. Corby saw the biggest gain in England, also 96%.
The smallest house price increase amongst New Towns was in Bracknell with a 50% rise since 2002. Redditch at 59% and Crawley at 61% saw the next smallest price increases.
Only three out of 22 New Towns have an average house price that is higher than that for their region as a whole. In Northampton, the average house price of £179,494 is 13% higher than the average in the east midlands. Average prices in Warrington are 9% above the regional average and in Hatfield they are 2% above.
In contrast, house prices in Peterlee and Basildon are 38% below the average for their regions. Stevenage is 26% below and Harlow and Milton Keynes both 25% below the average in their region.
The average price for a home in a New Town at £182,354 is 6.1 times gross annual average earnings of £29,794. This represents a fall from 6.3 times over the past year and is below the national average of 6.9.
Peterlee in County Durham is the most affordable New Town with an average house price of £86,427 that is 3.2 times gross average annual earnings. The next most affordable New Towns are Skelmersdale at 4.0, Newton Aycliffe at 4.5 and Runcorn 4.5. Peterlee is the only New Town with an average price below £100,000.
The research says that the improvement in affordability over the past five years has been driven by an increase in average earnings, which across New Towns has risen by an average of 9%. In contrast, house prices in New Towns are, on average, broadly unchanged, up just 1% compared with 2007.
In addition to the recent improvement, affordability in New Towns is also favourable in comparison to the average for England & Wales as a whole. On average, the house price to earnings ratio across the country stands at 6.9. The more favourable affordability situation in New Towns is largely because house prices in these towns are, on average, 21% lower than the national average of £230,325.
‘Many New Towns are within easy commuting distance of major commercial centres, where housing is typically more expensive. This is particularly striking for New Towns in the south east, where the average property price is close to half, on average, compared to that in London,’ said Suren Thiru, housing economist at Lloyds TSB.
‘The combination of strong earnings growth and lower priced property, together with good accessibility to the capital, has helped to support prices in many New Towns in the south east during the economic and financial downturn. In addition, populations in many New Towns in the south east have increased since 2007, which is likely to have added to housing demand,’ added Thiru.