The average household disposable income for the UK’s top 40 towns and cities has risen by £1,761 since before the recession to £14,068.
The rise in disposable household income has largely been driven by substantial reduction in mortgage costs as a result of the Bank of England’s interest rate policy, says chartered accountant UHY Hacker Young.
It looked at the growth in average household disposable income – the money a household has left to spend or save after taxes and mortgages or rents - in the UK’s top 40 towns and cities (by population size). Aberdeen had the UK's biggest increase - 19%.
Colin Wright, partner, said: “Households in Aberdeen have benefitted from both the collapse in the UK’s mortgage costs and, uniquely, from the oil boom. As one of the few global centres of the oil & gas industry Aberdeen has boomed in recent years.”
“It can be hard to imagine but Aberdeen is now part of that small group of international oil cities that have had a relatively good recession like Houston, Bahrain and Almaty.”
Wright added that as real wages have stagnated few people feel better off, but that the historically low interest rates have bailed out the finances of many households.
Top five towns and cities
The other top five towns and cities enjoying the biggest increases in gross disposbale household income (GDHI) were:
* Brighton, £2,463 increase from £14,869 to £17,332 over five years
* Belfast, £2,347 increase from £12,757 to £15,104 over five years
* Gillingham and Medway towns, £2,288 increase from £13,168 to £15,456 over five years
* Blackpool, £2,188 increase from £10,629 to £12,817 over five years
Brighton’s second place in terms of growth in household income is due to the fact that the seaside resort has become a magnet for media and high tech entrepreneurs benefitting from the explosion in app development market, who may prefer ‘London-by-the-sea’ for its better lifestyle and lower housing and other costs compared to the capital city.
By contrast, London achieved only 7th place on the disposable household income table. While London continues to be an engine for wealth creation, the reduction in City bonuses and jobs, as well as the boom in house prices driven by foreign investors (GDHI is after mortgage and rent) during the last few years have impacted on Londoners’ disposable incomes.
Wright said: “London is a dynamic economy that will continue to create jobs and attract new investment. But the success of the property market, along with City job losses and new restraints in bonuses has meant that London has dropped in the disposable income league.”
“These figures are a dramatic illustration of the need for the Government to address the lack of housing stock in London, as there is a real risk that well qualified and talented individuals will seek opportunities outside the UK where they might enjoy a better standard of living.”
Bottom five towns and cities with the smallest additional growth
The five towns and cities with the smallest additions in disposable household income were:
* Hull, £1,418 increase from £9,689 to £11,287
* Bristol, £1,335 increase from £12,730 to £14,065
* Leeds, £1,172 increase from £12,297 to £13,469
* Bradford, £1,151 increase from £11,216 to £12,367
* Nottingham, £1,070 increase from £9,764 to £10,834
Wright said: “Businesses in these cities and towns need private and public sector investment to help them catch up.”