Bournemouth saw the sharpest increase in house prices in all areas of England and Wales in January 2016 as the Victorian coastal town in Dorset rises in popularity among home buyers. Your Move said the average Bournemouth house price went up 2.9% over the month to £261,232, faster than anywhere else.
"This upswing has been propelled by the expanding tech sector in the city. Last year Bournemouth was named the fastest-growing digital economy in the UK," said Adrian Gill, director of Reeds Rains and Your Move estate agents. "This 'silicon beach' surge has created more well-paid tech jobs in the area – spurring the recent rise in home values, as more people look to move into the neighbourhood."
Tech City UK, the government-led initiative based in Shoreditch, east London, to help drive growth and innovation in the technology sector, says Bournemouth and neighbouring Poole saw an increase of 212% in new digital companies between 2010 and 2013 alone, employing 7,000 people. It hosted the Silicon Beach technology conference in September 2015.
Across the whole of England and Wales, Your Move said the average price rose 0.2% in January to £290,642. "Last June, average prices crossed the £280,000 marker, but we have to go back to August 2014 for the crossing of the £270,000 threshold," Gill said. "We're now passing these milestones in quicker and quicker succession, as prices pick up pace. This hastening is good news for homeowners, but means it's getting harder for those still hoping for home ownership. In the last 12 months there's been a 5.5% upswing in average property prices compared to just a 2.1% rise in average earnings."
House prices have risen sharply because there is a shortage of supply in some parts of the country, particularly London and the south-east of England. As a consequence, many aspiring home owners struggle to save a sufficient deposit, or secure a mortgage large enough. But there are a number of government policies focused on supporting first-time buyers onto the property ladder. These include Help to Buy, which offers an interest free loan, an ISA topped up with public money or a mortgage guarantee from the Treasury; discounted "starter homes" for under-40s; and shared ownership schemes.
However house building is still running at around half the level needed to meet demand. Estimates on demand vary from 200,000 to 300,000 new homes every year. Housing starts in England in the year to September 2015 were 136,830, down by 0.8% on the 12 months before, according to government statistics, well below what is needed.