A number of towns have been awarded city status this year. So, whether you’re buying or selling property (or are an agent) it might be a good time to look at if city status affects the property market. And if it can raise prices.
First a look at which cities have been given city status this year as part of the Queen’s Platinum Jubilee celebrations.
Eight towns won the honour this year ahead of the Jubilee weekend in June. This was the highest number of awards in a single competition. They newly created cities are Bangor in Northern Ireland, Colchester, Doncaster, Douglas on the Isle of Man, Dunfermline, Milton Keynes, Stanley in the Falkland Islands and Wrexham.
Southend on Sea was awarded city status earlier this year in honour of former MP Sir David Amess.
What makes a town a city?
It’s worth pointing out that there are no fixed requirements for a town to qualify for city status. It doesn’t, as is often thought, have to have a cathedral. It doesn’t need to be a place of any great importance. Although many cities were created in the past because of their commercial importance, or because they were centres for local government. A town doesn’t even need a particular population size to become a city.
Interestingly in this latest round of awards the Platinum Jubilee Civic Honours Competition required applicants to demonstrate how their unique communities and distinct local identity meant they deserved to be awarded city status. They were also required to highlight their royal associations and cultural heritage. There was no requirement for size or importance to be considered.
Is there a link between city status and property prices?
If you look closely at existing cities there sometimes appears to be a correlation between city status and property prices. But often there is no real correlation whatsoever!
In the south west both Bristol and Bath are cities and both are higher priced locations. In the south east Cambridge is an expensive city while not too far away the town of Stevenage is much cheaper. In Yorkshire Harrogate isn’t a city, yet it is one of the region’s most expensive locations while the city of Bradford is one of the cheapest.
What do experts say about how city status affects the property market?
Research from Savillsindicates that gaining city status can create an initial boost to house prices. In the two years after becoming a city, house prices in Chelmsford increased 11% while prices in Perth and St. Asaph increased by 8% and 6% respectively. Momentum for growth has not slowed in Chelmsford. However, the impact has been less meaningful in the long term for Perth and St. Asaph.
This report quotes GetAgent who researched price growth across six cities that previously gained city status this century and how they changed over the year following this change of status. According to their study house price growth across newly designated cities rose by 14.2% on average over the following year versus just 11.6% across England and Wales as a whole.
So what impact does city status really have?
It’s probably fair to say that, really, it doesn’t. Certainly not in the long run.
A growing property market depends more on a growing economy, good infrastructure and high property demand compared to supply. And these are factors that apply in any location, regardless of whether it is a city.
It is true that some cities have expensive property prices, as do some towns, but it is usually for these reasons and not the city status in itself. And the reverse is also true.
It is also probably true to say that newly awarded city status does attract publicity and raises the profile of a town that has become a city. That might help to attract business investment or property buyers who haven’t considered the location before. But the impact of that might not last for ever.
What is interesting about the current crop of new cities is that they are currently good value in property terms compared to their wider region. Colchester and Milton Keynes are amongst the better value locations in the south east and for London commuting. Wrexham is far cheaper than nearby Chester. Dunfermline is far cheaper than Edinburgh across the Firth of Forth. Doncaster is a cheap property hotspot and also has great infrastructure by road, rail and air. They’re all probably locations that could see growth in the property market even without city status.
Another factor to be considered is the future of the wider property market. Should prices drop nationally that could wipe out any gains city status brings.
At the end of the day it will be very interesting to see how city status affects the newly created cities. It would be a very brave person who buys or invests in them on the basis of city status alone however!