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wish I could afford one

Valuing English And Welsh Housing At County Level

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Every year I spend a few hours valuing the housing of England and Wales down to a County level. Importantly I'm looking at Value (County House Prices compared with County Gross Earnings) as opposed to Affordability which is just an ability to service debt.

The full post including some analysis and the methodology is here with the key table below:

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Just to say thanks WICAO

As last year - fascinating.

I live in Herefordshire - highest house prices and lowest income in the West Midlands. I suspect that the house prices are strongly influenced by the Escape to the Country type large rural houses which have quite a high turnover driven by outside money, whilst the settled local population stays put in their ordinary small houses in the city and towns so the ordinary small houses don't appear in the stats proportionately to their actual numbers.

Certainly, rightmove never reflects the overall mix of houses with a disproportionate number of expensive houses for sale. Another factor is the high number of retirees and even higher number of NIMBYs wanting to `protect the countryside`.

Still, our yokel brains overheat when wondering if we are rich because our houses are worth a lot, or poor because we have low wages.

y

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...

I live in Herefordshire - highest house prices and lowest income in the West Midlands. I suspect that the house prices are strongly influenced by the Escape to the Country type large rural houses which have quite a high turnover driven by outside money, whilst the settled local population stays put in their ordinary small houses in the city and towns so the ordinary small houses don't appear in the stats proportionately to their actual numbers.

Certainly, rightmove never reflects the overall mix of houses with a disproportionate number of expensive houses for sale. Another factor is the high number of retirees and even higher number of NIMBYs wanting to `protect the countryside`.

Still, our yokel brains overheat when wondering if we are rich because our houses are worth a lot, or poor because we have low wages.

y

Herefordshire, a lovely part of the world. Still working through the options but once Financially Independent we'll likely bug*er off to the Med. If we do stay in the UK though Herefordshire is definitely an option. Average price wise it's expensive for the West Midlands but compared to the South East it's on par with Bedforshire ... and I know where I'd rather be. We'll also consider further west, maybe Powys, where you seem to get even more for your money. Plenty of nice locations there also. Of course we'll luckily not be worried about how low the salaries are in that part of the world.

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Full marks for the presentation of this data, WICAO.

My only reservation is that using the Land Reg average price for each county/district can lead to misleading results. This is because of the LR's unusual methodology where it simply modifies the April 2000 geometric average by the growth in the price index over time.

This means that although the change in the index should accurately reflect the price growth of properties that have a repeat sale, the latest average is actually based on the sales mix of houses in 2000, and if the mix since then has changed materially then the latest LR average may bear no relation to the actual present-day average.

Take Middlesbrough for example. This has the lowest average house price in your table: £62,546. However if you compute the averages of the prices paid in Middlesbrough from the Land Reg's 2015 dataset you get the following:

Arithmetic mean: £124,500
Geometric mean: £105,900
Median: £110,000

...and if you search on Rightmove you'll find roughly 1,800 properties for sale in Middlesbrough, but only 200 or so are priced at £62,500 or below. The mid-point is actually c. £125,000.

It's the same story in Hartlepool and County Durham, whereas Greater London is actually biased in the other direction (probably due to the increasing subdivision of homes into flats since 2000).

IMO you'd be better off computing the mean and median prices from (say) the latest three months sales data and then generating mean price/mean wage and median price/median wage P/Es. This is straightforward with computer code, but admittedly somewhat laborious by hand.

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Was very surprised by some of price rises in Wales particularly in Merthyr as it's a dump. Then it occurred to be that part of the borough extends up into the Brecon Beacons, so once again you've got house in country types distorting what is really going on.

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