Latest: House Price Crash News

Thursday, Apr 15 2021 Add a News Blog Article

CPI down from 0.9% to 0.7%

[CPI] Inflation Down To Only 0.7% - is DEFLATION close? Bad for House Prices?

Deflation ebbing ever closer, effect on house prices - time to panic? Stagflation is now a real fear for the UK

Posted by Data Dave @ 12:05 PM 2 Comments

What Happens to House Prices during Recessions?

UK House Prices during Recessions

House prices tracked during the last 4 UK recessions. Results may surprise...

Posted by Old Man George @ 10:10 AM 5 Comments

More Money for Houses

Sunak's budget expected to offer first-time buyers mortgage guarantee

The government have decided to provide incentives to mortgage lenders to offer 95% mortgages for first-time buyers. There don't seem to be many details. I expect the incentive will be UK taxpayers underwriting a share of the loan and hence share of risk if the borrower defaults. at a time of significantly rising national debt, I find this policy questionable.

Posted by Quiet Guy @ 11:24 PM 4 Comments

one in 10 owner-occupiers do not have enough savings to cover even a single month mortgage payments

770,000 households could see their homes repossessed

About 770,000 homeowners are vulnerable to repossession during the pandemic if they have suffered a loss if income, a new report revealed, calling on more government support for those at risk of eviction. Meanwhile, renters may be struggling as well. Last week, a coalition of landlords, housing groups and charities has warned that the government needs to do more to support renters and avoid them "being scarred" by debts, otherwise more will lose their homes in the coming months, with the risk of an increase in homelessness.

Posted by deepak @ 12:31 PM 2 Comments

But optimism aka greed prevails

House sales fall as buyer interest wanes

'Sellers are pricing in expectation rather than reality': House sales fall as buyer interest wanes - but prices are still rising everywhere but London Sales, new listings and buyer queries all dropped off last month, says the Rics But prices everywhere in the country, apart from London, are still on the up Estate agent says homes are being priced 'in expectation rather than reality'

Posted by jalopy @ 03:44 PM 1 Comments

As expected, anything for the bubble

Help to Buy deadline extended amid Covid delays

A deadline to buy a home under the current Help to Buy scheme in England has been extended to the end of May. Probably will be done again.

Posted by deepak @ 05:34 PM 2 Comments

Annual house price growth slows for first time in six months as end of stamp duty holiday approaches

Annual house price growth slows for first time in six months as end of stamp duty holiday approaches

Prices down 0.3% month-on-month, after taking account of seasonal factors. Could this be the start of a long-overdue correction or will the Government step in to see off the danger of investors not feeling richer month on month?

Posted by magnifico @ 02:14 PM 4 Comments

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UK House Prices Graph

The UK average house price is now £249,309.

The house price index (HPI) is currently 130.76.

UK property prices have risen by 7.5% when compared to the previous year but have fallen 0.4% when compared to the previous month.

Source: Land Registry

uk average house price graph

UK House Price Index

Source website Period covered Average house price Monthly change (%) Annual change (%) Archive / Graph Peak average house price Change since peak (%) Official releases
LSL Property Services & Acadametrics (England and Wales) Feb 21 £333,331   1.10   8.60 Cross Feb 2021 (PDF)
Halifax House Price Index Mar 21 £254,606    1.10   6.50 Tick 05/02/2021 (PDF)
Office for National Statistics [ONS] Jan 2021 £249,309 0.4 7.5 Cross 17/02/2021 (PDF)
Zoopla / Hometrack – Monthly National Survey Feb 2021 £226,400    0.00 4.1 Cross Link
Land Registry Monthly Report Jan 21 £249,309  0.4   7.50 Tick 17/02/2021
Nationwide House Price Index Mar 21 £232,134    0.20   5.70 Tick March 2021 (PDF)
Rightmove ‘Asking’ Price Index Mar 21 £321,064   0.80   2.70 Tick March 2021

House Price Index - Greater London

Source website Period covered Average
house price
Monthly
change (%)
Quarterly
change (%)
Annual change
(%)
Archive /Graph Peak average
house price
Change since
peak (%)
Official releases
Land Registry Monthly Report Jan 21 £501,320 1.06 N/A 5.3 Tick £530,409
(Jan 16)
6.47 17/03/2021 (PDF)
Nationwide House Price Index Q1 21 £482,576 N/A 4.8 6.2 Cross Current Quarter (Q1 2021) March 21
Rightmove ‘Asking’ Price Index Mar 21 £624,975  0.50 N/A 2.20 Tick £649,864
(May 17)
3.82 Feb 2021

House Price Predictions

If you have discovered other or revised predictions that you’d like added to this list then send an email to us with all the information for each column and also a link to a website that contains the information so that we can verify the data.

This table is now sorted by the date that the prediction was made.

Source website Analyst Photo Date prediction made Amount predicted Region Time Period Evidence Notes
www.cebr.com C.E.B.R Photo of David Orr 2020   13.8% UK 2021 Tick
”CEBR predicts that average house prices will be 13.8% lower in 2021 than in 2020.”

 

uk house price prediction

The outlook at the start of 2021 in terms of restrictions imposed by Covid-19, seems similar to that of March and April of 2020. After further easing of restrictions in 2021 we could therefore see what was experienced after the March lockdown ended in 2020 i.e. a surge in house prices. This was caused primarily by buyers scrambling for more space, both house and garden. 

Flats and maisonettes could stand to make the smallest gains in 2021 whilst larger, detached properties with bigger gardens could again stand to see the most gain.

 

The data also shows that for 10 years average house prices in the UK were above the long term trend line but to date have spent a further 10+ years below it.

 

The data shown in the graph after Q4 2020 has been ‘forecast’ by continuing long term trends and further price rises. It shows UK average property prices could reach £275,000 by the end of 2022, nearly a 15% rise.

House Price to Earnings Ratio

This is calculated by dividing the house price for a region by its earnings. That ratio then serves as an indicator of relative affordability. 

 

A higher ratio indicates on average that it is less affordable for people to purchase a house in their region. On the flip side a lower ratio indicates higher affordability in that region. 

 

Whether something is ‘expensive’ can be very subjective and affordability then plays a key part. Bear in mind, ‘expensive’ to one person might not be expensive to another, so that’s why it’s important to break the earnings ratio down by geographical region. It also highlights regional purchasing power. 

 
uk house price to earnings ratio

The chart shows the average multiple of a person’s non taxed pay that’s required to purchase a property, in that particular region. For instance earning £25,000 per annum where a property costs £150,000 would give an earnings ratio of 6. The UK average is 6.2 as shown on the far right.

 

London has the highest multiple at 10.6 and the lowest region is the North of England at 4.2 closely followed by Scotland at 4.4.

 

By comparison over 20 years, from Q4 2000, this ratio has increased dramatically. This means house prices have risen faster than wages have increased, making property across the UK on average more expensive, relative to what people earn.

Have High UK House Prices Put Buyers Off?

The number of sold properties is down on previous years as shown in the chart but this could be a direct cause of the pandemic. However with interest rates being so low, [the Bank of England base rate is just 0.10%], this means that the cost of servicing a mortgage has actually been downtrending over recent years and is now about bang on the historical average.

uk property sales volume
average house prices for first time buyers

Are First Time Buyers Priced Out?

Of course for first time buyers there is the issue of saving for a deposit. This however isn’t always saved from earnings. Bank of Mum and Dad plays a huge part as 40% of people in 2018-19 received help with a deposit. 

This should actually come as no surprise, being that a 20% deposit is 104% of a first time buyers annual income. 

First time buyers have a below average ‘earnings to property prices ratio’ of 5.2 and  purchase less expensive properties than former owner occupiers. [data for England only]

In short, property has become more expensive relative to earnings over the last 20 years making it harder for people, who need to save for a deposit, to get on the property ladder. Once on the ladder though, the costs of a mortgage are at the historical average mark, meaning property ownership isn’t any more expensive than in previous years. 

This could be taken as a clear indicator that the property market is not overheated.

Home ownership rates are at a 3 year high but still down on 2003 highs of 70.3% meaning there could be room for movement.

Prices increased 7.3% last year but are still down on 2007 highs meaning further growth could be possible plus property prices still remain well below the long term trend.

Interest rates are at a historic low meaning the cost of servicing a mortgage is ‘cheap’ and mortgage approvals are up, which is a good indicator of forward-looking demand. 

 

Give us your thoughts? Can you see further house price growth this year or is a looming house price crash on the horizon?