Much has been said about ‘levelling up’ the country over the last couple of years. This week we will look at how the levelling up agenda is going and at what it could mean for the property market.
The concept of levelling up was first announced as part of the General Election campaign in 2019.
In this year’s Budget the Chancellor announced a Levelling Up Fund of £4.8 billion to aid infrastructure and town centres around the country. Last month a Cabinet reshuffle saw Michael Gove appointed as the Secretary of State for Levelling Up, while the Ministry of Housing, Communities and Local Government was rebranded as the Department for Levelling Up, Housing and Communities.
What exactly does levelling up mean?
This is perhaps the first snag when trying to decide what it might mean for the property market. There is no official definition of levelling up. It could mean anything and everything. It could mean nothing much.
A levelling up white paper is expected imminently which might provide more detail.
For now, let’s assume that levelling up means balancing the economies of London/the south east and the regions. So that they are more equal in terms of jobs, incomes and public and private investment. Or creating a level playing field as it has been called.
* It could mean policies aimed at creating more jobs in the regions. This might include more investment in skills as well as relocating more Government jobs to the regions.
* It could mean better infrastructure in the regions, so people and goods can move around more easily. Perhaps even more major projects like the HS2 high speed railway for example.
* It could mean more incentives for businesses to invest and relocate. Like an extension of Enterprise Zones and Freeports for example.
Interestingly, these kinds of schemes were around long before levelling up became a thing. So you might anticipate that when the next round of plans for levelling up are announced they will be something much more radical.
It is worth bearing in mind that there have been previous attempts to do something that sounds very much like levelling up before. The Midlands Engine and Northern Powerhouse were announced in 2014. It’s probably fair to say that not much progress has been made with those concepts.
So let’s move on from the politics and look at what could happen in the property market if the economies of London and the regions do get levelled up. Or even if the gradient between them is reduced to some degree.
* More businesses and more jobs outside London could mean more development and construction in the regions. It could mean more demand for land, and land prices could rise.
* Wages could rise in the regions. It has been said levelling up could involve more apprenticeships, improving skills and creating higher value jobs outside London. This could fuel the property market.
* It could mean more demand for homes in the regions and higher house prices there.
* It could mean a rising demand for homes to rent in the regions and higher rents there.
* Parts of the regions that were once not that sought after and relatively cheap could become more in demand and more expensive.
At this point it is perhaps worth considering that not all the regions are economically equal nor have similar property prices anyway, nor are even that far behind London. There are some very economically successful and expensive regional towns and cities – often very close to some struggling ones with very low property prices.
* There could be very good opportunities for property investors and landlords who invest now (or soon) to make large capital gains and earn high yields. Home owners in the regions could become much wealthier too.
* Property could become unaffordable to buy and to rent in many regions which are currently affordable. That could be an undesirable kind of levelling up.
* It could mean that the London property market loses ground with much slower property price rises and even price falls. Which could have the reverse effect of that intended in that London could become more attractive as a place to buy and to locate.
Some commentators are already forecasting that prices in the regions will rise at a faster rate than London in any case.
Lastly, if levelling up doesn’t happen will the economies and property markets of London and the regions diverge even further? Could we see average property prices in London not just be double the national average as now, but treble or quadruple it?
So could all this really happen? Could the levelling up agenda create thriving, high priced property markets across the regions to the benefit (or maybe disadvantage) of property owners, investors and landlords alike?
The fact is, it’s extremely difficult to say. Even if we knew what levelling up was going to be it would be difficult to say. Unless or until that is made clearer forecasting the impact on the property market is hard to forecast with any accuracy.
Whatever levelling up turns out to be it’s clear that there could certainly be implications for the property market across the country. It’s certainly something that investors, landlords, agents and ordinary house buyers alike will want to keep an eye on.