Homes in new towns at most affordable since 2007

Monday, 9 July 2012 9:56 AM

House prices in the new towns of England and Wales are at their most affordable since the financial crisis began in 2007, according to an analysis by Lloyds TSB.

The bank said the average price of a home in a new town of £182,354 is now 6.1 times gross average annual earnings of £29,764. That compares with 6.3 times earnings last year and a national average of 6.9 times earnings.

The improvement in affordability has been driven by an increase in average earnings of 9 per cent over the last five years. In contrast, house prices in new towns are up only 1 per cent since 2007.

However, there is a big north-south divide in what has happened to prices. There have been increases of 14 per cent in Hatfield, 8 per cent in Welwyn Garden City and 6 per cent in Harlow and Hemel Hempstead.

Outside the South East, only Skelmersdale in Lancashire (up 7 per cent) has seen any increase at all and prices have fallen 14 per cent in Newtown in Powys and 12 per cent in Corby in Northamptonshire.

Across the country as a whole, the average house prices in new towns of £182,354 is 21 per cent cheaper than the national average selling price of £230,325.

Suren Thiru, housing economist at Lloyds TSB, said: "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.

"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."

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