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Hospitality labour crunch continues as low-paid risk being priced out of UK tourist hotspots

·3-min read
Hospitality labour crunch continues as low-paid risk being priced out of UK tourist hotspots
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. Photo: PA

Young people and low-paid workers face being priced out of tourist hotspots, an unforeseen consequence of house price rises that could potentially exacerbate the labour market crunch. 

According to the Office for National Statistics (ONS), despite falling from a record high in June, the average UK house price increased to £256,000 ($349,670) in July 2021 — up 8%compared with the previous year.

House prices were rising at three times the national rate in some rural and coastal areas in July, such as Conwy in North Wales (25.0%), North Devon (22.5%) and Richmondshire in the Yorkshire Dales (21.4%), continuing a trend seen during the COVID-19 pandemic.

Meanwhile, the seven areas that recorded house price falls in July were all London boroughs, the ONS said. 

House prices are increasing partly because of temporary changes to taxes paid on property purchases, including stamp duty in England and Northern Ireland, but they also reflect a shift in consumer preferences with growth being driven by rural and coastal areas.

Prospective home buyers are seeking more space following coronavirus lockdowns, with prices for detached houses (9.0% growth in July) consistently rising faster than terraced houses (7.7%) or flats (6.1%).

Read more: Oil prices head above $80 per barrel as oil crisis beds in

As a result, 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.

"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," said Sarah Coles, personal finance analyst, Hargreaves Lansdown. 

"It has also created a real headache for these small businesses struggling to find staff, as more of their employees leave the area.”

The divergence in house price growth between London and elsewhere can be seen in tourist hotspots — defined as the local authorities with the highest number of travel and tourism businesses per resident population.

Eden, Powys, and Derbyshire Dales have all posted price rises of 10% or more in every month of 2021 from January to July.

While also considered tourist hotspots, City of London, City of Westminster and Camden are the only areas to have seen prices decline for those seven consecutive months.

Those who work in tourist hotspots earn less on average than people who live there.

For example, as of April 2020, Cotswold residents earned 28.7% more than people who were employed in the area. There were similar differences between the earnings of residents and workers in other tourist areas such as Derbyshire Dales (27.5%) and Allerdale (24.5%).

This is comparable with areas of Outer London such as Bexley (29.0%) and Harrow (27.3%) that are subject to the “commuter effect,” where people who earn high incomes in the city centre live on the outskirts.

Read more: UK house prices hit record high yet again

The news comes following Zoopla's house price index, released on Tuesday, which showed that UK house prices have hit another record high, with average annual house price growth increasing by 6.1% in August — over double the rate of growth compared to a year before.

While the stamp duty holiday for England and Northern Ireland, introduced in response to the COVID-19 pandemic, will come to an end following the tapered period at the end of September, demand and activity is going strong.

With the time between listing a property and agreeing a sale consistently averaging under 30 days each month since May, the market is moving at its fastest pace for the past five years. The time taken to sell would usually clock in above 40 days at this time of year, according to Zoopla.

Buyer demand is also 35% higher than average levels recorded over the last five years.

Watch: How much money do I need to buy a house?

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