Geographical Immobility

When markets fail due to location-based complications

Geographical immobility occurs when you are unable to or find it challenging to move from one location to another, for example, between cities or migrating to another country. For example, moving from Liverpool to London would be extremely difficult due to the difference in house prices. The land in London is much more valuable as it is the capital city of England and is a megacity with a population of over 10 million. It is the UK’s financial centre and is heavily involved in global trade and affairs, and so there are many high-quality and well-paid jobs here. All of these factors combined and much more cause a higher demand for housing in London and so much larger house prices than you would get in Liverpool, which has a much lower population and is suffering from the long-term repercussions of the deindustrialisation of the North, which means there are fewer and lower-paying jobs and so less demand as no-one would like to live and work there.

Data from ONS House price Index Sep.2015

This can be seen in the graph above showing average house prices in different regions in England and the UK and comparing them to England and the UK on average. It can be seen that the North West, where Liverpool is situated, has an average house price of £184,000, whereas London has an average house price of £531,000. This is a difference of £347,000, or roughly a 189% increase, clearly showing how much more valuable land is in the South of England, specifically London. The average in the North West is even lower than the average for both England and the UK, which stand at £299,000 and £286,000 respectively. Although these values are inflated by the values of London, the South and the South East, this still shows the difference in land value between the North and the South. The difference in wealth is clarified by the idea of the North-South divide, which splits England between the wealthy cities in the South and the dying towns in the North. As a result, even if someone from Liverpool had a successful application for a job in London, they would not be able to move there. The money from selling their house in Liverpool would nowhere near cover a similar-sized home in London, preventing the market from functioning properly by allocating resources efficiently


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: