Locals priced out of tourist hotspots as house prices soar
House prices in tourist hotspots are increasingly out of reach for the young and low paid, according to figures published by the Office for National Statistics.
It warns that rising house prices and private rents mean that ‘some workers are at risk of being priced out of living in rural and coastal areas, contributing to skill shortages in the tourism and hospitality industries that their local economies rely on’.
House price rises
Despite falling from a record high in June, the average UK house price (£256,000) increased by 8.0% in July 2021 compared with the previous year.
But in some rural and coastal areas in July, house prices were rising at three times the national rate, such as Conwy in North Wales (25.0%), North Devon (22.5%) and Richmondshire in the Yorkshire Dales (21.4%).
Plus Eden, Powys, and the Derbyshire Dales have all seen price rises of 10% or more in every month of 2021 so far (January to July).
This reflects a shift in consumer preferences with growth being driven by rural and coastal areas.
Homebuyers are looking for more space, with prices for detached houses (9.0% growth in July) consistently rising faster than terraced houses (7.7%) or flats (6.1%).
As a result of soaring house prices, people living in rural and coastal areas – particularly the young and those on lower incomes – are at risk of being priced out of the housing market. This could be contributing to hospitality businesses being unable to fill vacancies, with the industry being predominant in tourist areas and containing a high proportion of young and low paid workers.
People working in tourist hotspots earn less than people who live there. Cotswold residents earned 28.7% more than people working there, while in the Derbyshire Dales it’s 27.5% and in Allerdale it’s 24.5%.
It’s no surprise that 30% of hospitality businesses were struggling to find staff at the end of August – more than twice as many as in other industries.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “The countryside and seaside were the property hotspots of the past year, as more city dwellers upped sticks and moved to the sticks.
“House prices are booming at three times the national average in some of these areas, which is pricing out younger people and those on lower wages. This isn’t just devastating for families, who can no longer afford to live in their hometown, it’s also a nightmare for restaurants, pubs, hotels and ice cream parlours, whose employees are leaving town.
“It’s a horrible struggle for young people and those on lower incomes in particular, which includes many of those working in the hospitality businesses that dominate the local economy. It has also created a real headache for these small businesses struggling to find staff, as more of their employees leave the area.”