Affordable homes seem to go with low wages - David Alexander

Anyone with the flexibility to live anywhere in Scotland could do worse than choose Greenock.

David Alexander is the chief executive officer of DJ Alexander Scotland

The views from some residential areas of the town are to die for – across the wide expanse of the Clyde estuary to the Luss Hills, Cowal Peninsula and three sea lochs. Yet such scenic grandeur does not come at the cost of isolation – Glasgow city centre is just 40 minutes away by rail or motorway, Glasgow Airport even closer.

Even better, Inverclyde, of which Greenock is the focal point, is the cheapest local authority area in which to buy a house in Scotland, based on the ratio of price to earnings. Here the average price is just 3.1 per cent of earnings, compared to 14.5pc in the two most expensive areas of the country – the cities of Westminster and London. Effectively this means that the average price of a house in Greenock equates to just over three times the average salary level, compared to 14.5 times in the most exclusive parts of London.

These figures are taken from a new survey on house-price affordability, released this week by the Halifax. Of the ten “most affordable” local authority areas in the UK, no less than seven are in Scotland – Inverclyde plus Dumfries & Galloway (3.3 times salary), West Dunbartonshire (3.4), North Lanarkshire (3.5), Dundee (3.6) and East Ayrshire and North Ayrshire (both 3.7).

Most of these are, of course, in post-industrial West of Scotland while socially and culturally Dundee could be described as a west coast city in an east coast location. As for Dumfries & Galloway, this agricultural region has traditionally been associated with lower than average wages, whatever the health of the wider economy.

Significantly, the ten least affordable local authority areas (in terms of price to income ratios) do not include anywhere in Scotland, all of them being in Greater London and the South-east of England.

Wealthier areas (e.g. Edinburgh, East Lothian), bump up the all-Scotland affordability level to 5.1 but after Northern Ireland this is second-lowest in the UK, the average of which is 7.1.

On paper being the “most affordable” place in the country in which to buy a house should be good news. Sadly, affordability seems to go hand in hand with a low-wage economy. In Greenock, for example, the rate will undoubtedly benefit the well-remunerated professional employed by the local authority or the State – or someone prepared to commute for higher earnings in the private sector. But relatively low house prices do not have the same benefit for a local person earning the minimum wage or just above. And in Greenock, as elsewhere, this has become common with the departure of the large-scale (and often good-paying) companies who until the early 1980s were the backbone of local employment.

My guess is that the wider population in “disadvantaged” towns might not mind a bit of house-price inflation if it came with more and better-paying jobs within a buoyant local economy. It is impossible to exaggerate the effect “business confidence” has on a property market; Edinburgh may have its frustrations (especially for first-time buyers) but demand is simply a reflection of a city that feels comfortable with itself.

Sadly, we cannot replicate Edinburgh’s triple benefits of big administration, big legal and big business elsewhere in Scotland but something can be done to reduce the disparity between the capital and places like Greenock…..perhaps by following the maxim of “less is more”.

Government itself cannot “create jobs” but what it can do – crucially – is to create the type of environment where jobs flourish: in other words a tax regime that encourages new start-ups and existing businesses to expand which inevitably leads to more people being hired. And I cannot think of a better time to do this than now when – post-Brexit and post-pandemic – the country appears to have more vacancies than available people to fill them and workers (whether unionised or not) enjoy a good bargaining position.

Yes, the result may be higher prices in the likes of Greenock but the quid pro quo is that more local people will be able to afford them – and have a bit left over besides.

David Alexander is managing director of DJ Alexander