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How house prices have changed in the last two years in Brighton

Eddison Wells is privileged to have an office in Brighton. As as Brighton Mortgage Broker we value the opportunity to pop down to the beach after a day in work to soak up the sun.

The need for shelter is a basic human need. To many people across the world, home ownership is a dream come true. For the vast majority, however, the monthly battle with the landlord remains their only option. Nowhere is this struggle more apparent than in London and the towns surrounding it. As the human population grows, more and more people are drawn by the lure of big towns. One of the effects of this burgeoning population is the shortage of decent and affordable housing. The immediate consequence is a rise in the cost of land and houses.

The prices of houses in Brighton have been on an upward trend for the last two decades. In this span of time, average prices of houses have leapt from £ 50,000 to £295,000, which is a percentage increase of almost 500%. This soar in prices has seen Brighton ranked first in the UK as far as the increase in house prices is concerned. The spike is largely attributable to the town’s commutable distance from London. As house prices hit the roof in London, more and more tenants and landlords increasingly look to outlying towns as more attractive options. Brighton has been a major beneficiary of this trend which has seen the price of its houses skyrocket.

The last five years have, however, seen some fluctuations in the house markets countrywide. House prices are, to a large extent, determined by banks’ willingness to lend with the asset in question (property) acting as collateral. In turn, the bank's decisions could be based on changes in policy by the government or in the economic environment. For example, the effects of Brexit on house prices have not been fully determined. What is apparent, however, is that Brexit caused anxiety in the mortgage and lending sectors, leading to a wait and see cautions stance.

On the policy front, stamp duty, a higher tax regime and the implementation of new and strict tests have seen landlords lose their favoured position by banks in favour of new house owners. That being said, it is highly unlikely that market could be heading for a crash anytime soon because the demand for houses far outstrips supply. In fact, the UK has always had a problem of housing because of its huge population and the relatively high levels of employment. The slowdown in the flow of migrants into the country might have reduced the demand for housing in London but not in the surrounding boroughs.

With house prices on an upward trend in Brighton, there is concern that, with the high cost, most wage earners cannot afford to buy their own houses. This is evident, bearing in mind that the average wage of a first-time owner in London at £25,000 is 20 times less than the cost of buying a house in that location since the average cost is £498,000. Mortgages have not helped much as fluctuations have left would-be homeowners fearful of taking them up when house prices are about to fall. This would mean paying a high sum for a house that is losing value. So, despite the celebration by young adults in the wake of limitations placed on landlords, they have not filled in the gap.

Those excited at the possibility of a property crash returning houses to affordability would be well advised to temper their glee. A crash comes with consequences in that those with huge mortgages are unable to pay, leading to repossession of their homes. This would devastate many lives as happened in the 1990’s. Others would find themselves trapped in houses they could not sell off; victims of negative equity. 

Over the last year, average prices of houses have risen more than 10% in Brighton and are expected to surpass the 300,000 mark. This is 50% dearer than the average for both Wales and England. Private rents top £1,000 for less than ideal accommodation, an indication of a housing crisis. This has hit ordinary working families particularly hard. Those earning less than £50K a year feel that the council has ignored their concerns;, to pander to the needs of the influx of students and Yuppies.

In cash terms, the average price of a home in Brighton has more than doubled in the last 14 years. This has meant that the town has become less and less affordable to the locals who now have to contend with rents that are way beyond their earning capacity. Andy Winter, who is CEO of the city's Housing Trust, affirms that the Government's Starter Homes initiative does not work in Brighton and generally in the south-east. The council’s plan to build 500 new council homes for the lower income brackets is seen as too little to stem the demand for housing in the town.

Even with the increase in prices of housing nationwide at around 7.1 percent, Brighton and Hove outstrip this by coming in at 10.6 percent. This, even as the North East of England only registered a growth of only 0.2 percent. Brighton is not likely to get a reprieve soon as far as the housing crisis is concerned. As a matter of fact, the number of homeless people has grown. A couple of concerned students have even come up with a project to house the homeless in rehabilitated shipping containers.

The forecast of the future of housing in Brighton does not show much reprieve. Even if the housing boom was to come to an end, it is not likely to go down suddenly. The banks have got the capacity to absorb a nationwide collapse of the industry of about 40%. Only a complete economic disaster is likely to result in such a level of loss. The government has a moral responsibility to increase the rate at which it provides decent and affordable housing for its citizens. It should also cushion the most vulnerable of its citizens. This will ensure that nobody ends up homeless. The slower but consistent increase in the prices of houses in Brighton that has been witnessed in the last two years is projected to continue. As for first-time homeowners with hefty pockets, the allure of Brighton as an alternative to London remains as potent as ever.