High rents could undermine economic boom in West of England

26 Jan 17
The West of England City region has enjoyed a strong economic recovery, however gains are at risk of being offset by rising rents and house prices, according to the Resolution Foundation.

Output in the region – which comprises Bristol, Bath and North East Somerset and South Gloucestershire – is at a record high, around 7% above the pre-crisis peak, and 26 percentage points higher that the city region average, the think-tank said in its A Western Union report.

The region’s strong performance has been underpinned by high employment, which at 76.8% is higher than any other city region in the UK with the exception of Cambridge and Peterborough. However, pockets of high unemployment remain in, for example, Bristol’s Hartcliffe and Lawrence Hill areas, where almost half of local residents are not in work.

The foundation said the West of England’s first metro mayor – who is due to be elected on 4 May – could make full employment one of his aims.

“To achieve this the mayor should target support at those who have missed out on the area’s recent job miracle, such as single parents and those living in less connected and deprived areas,” said policy analyst Conor D’Arcy.

But he added: “While the region’s economy has performed strongly, far too much of the gains from this growth have been swallowed by rising rents and house prices.”

Rents across the region rose 14% faster than in other cities between 2011 and 2016 – equivalent to more than £100 a month in rent. Renters in the West of England spend around 41% of their pay packets on rent, more than any other city outside London.

At the same time, home ownership among young people has plummeted, down to 52% of 25-39 year olds last year, from 69% in 2001.

Along with full employment, building more homes and boosting pay for low earners should be among the Metro Mayor’s policy priorities, the report suggested.

  • Vivienne Russell
    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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