Not as cheap as you think: Housing in the North East

Navigate to the cheapest houses on Rightmove or Zoopla, and you will inevitably be faced with a list of homes in the North East. But while housing is widely considered to be affordable here, the reality is that it isn’t as accessible as it looks for local people.

Ours is the region with the both the highest rates of statutory homelessness, and of homelessness deaths outside of the capital – so it's important we understand how the housing crisis manifests here, beyond the shorthand of house prices.

While the North East ranks as the top region for affordability in England, safe, secure homes are out of reach for many. In fact, home ownership – offering one of the securest forms of housing - is at its lowest in the North East compared to other regions outside of London, with just 61.1 per cent owner-occupied homes.

Despite being widely considered affordable, like all regions in England, the North East fails to meet the government’s affordability criteria of a household being able to purchase a house with five years or less of annual their income. Indeed, for people earning the lowest wages, a home is worth nearly 12 years of annual income. Despite this – shockingly – the North East is nonetheless the most “affordable” region, with London’s lowest earners needing 37 years of annual income. It is little wonder that there is housing crisis impacting lower earners the most.

This picture doesn’t improve when we zoom out to include rented and social housing either. While we have the lowest social and private rents in England, many people in the North East are struggling with the cost of rent. Nearly half of our lower-income private tenants, and a third of social tenants, spend over 30 per cent of their income on rent. This isn't affordable. 34 per cent of the North East’s lowest earners rent privately. This is the highest proportion across England. If we understand both that and that private rents have increased in the North East by 4.3 per cent in the last year alone, then we can begin seeing the true crisis hidden by the assumption the North East is affordable. Even for social rents, the Ministry of Housing, Communities and Local Government (MHCLG)’s own data shows that outside of London it’s renters in the North East who are struggling the most, with nearly 30 per cent finding paying rent “fairly or very difficult.”

So, what do the affordability ranks that imply the North East’s housing crisis isn’t that bad, overlook? First, affordability ratios for house purchases and rentals only consider full-time salaries. However, the North East has the lowest employment rate in England at 70 per cent, the highest unemployment rate at 5.6 per cent, and highest rates of so-called economic inactivity at 25.7 per cent. It also has the highest percentage of part-time workers of all northern regions. These ranks therefore overlook huge swathes of people in the North East.

What’s more – on home ownership - affordability ratios fail to account for peoples’ ability to save for house deposits, mortgage rates, and legal fees. Average additional costs for a first-time buyer total an average of £3,508. Of the UK regions, the North East has the lowest gross disposable household income, averaging £18,388 a year, and this has grown more slowly than the rest of the UK. A slow regional economy and low household incomes are not a good recipe for buying homes. Getting a mortgage in the first place often relies upon a good credit rating and secure work. Yet, the North East has the highest rate of insecure employment. Affordability ratios simply do not account for the ability to save for a house deposit, take on a mortgage with high interest rates, or pay rent - especially if people are not sure if they will be in a job from one month to the next

We must also not forget two salaries are better than one when it comes to housing costs, but not all families are traditional nuclear families. Indeed, the North East is the region with the highest proportion of single-parent families at 17.8 per cent, meaning individual income often has to stretch further, leaving less savings for house buying.

But, what about the homes to buy themselves? Cheap doesn’t equal a good home. Our region has many poor-quality houses for sale and a severe lack of local authority social rentals – which the North East heavily relies upon accounting for 22 per cent of all homes. While many of our region’s houses are ‘cheaper’, many are also dilapidated. Local people often don’t have deep enough pockets to fix this, meaning either they can’t really afford to buy them or do and live in poor conditions. The North East has the highest estimated average cost to bring non-decent homes to standard at a whopping average of £9,508.

These homes and that cost are simply inaccessible to many locals, instead lending themselves to developers and landlords to buy, ‘flip’ and rent out—some promoting their practice through TikTok. Like this, the North East is regularly advertised as the best place to invest to get more bang for your buck - to the detriment of locals.

While some argue that the rise in private renting shows demand for more private rentals, really, many have been pushed into them facing diminished social housing stock and mass waiting lists. Last year only 9,534 social rent houses were built by local authorities across England, and only 94 of those were in the North East—less than 1 per cent.

So while Rightmove and Zoopla’s prices and affordability ratios suggest a positive story of the North East’s housing affordability, our reality is that a good, affordable home is a pipe dream for many. This is why it’s important we build a regional understanding of the housing crisis and how it manifests differently across the country. It isn’t clear cut, but regionally complex.

India Gerritsen is a researcher at IPPR North.