Latest: House Price Crash News
Tuesday, Nov 30 2021 Add a News Blog Article
MoM Xmas Slow Down (-0.4%)
Prices in September climb 2.5% hitting £269,945 (11.8% YoY)
The Royal Institution of Chartered Surveyors’ (RICS) October 2021 UK Residential Market Survey reported buyer demand picking up slightly. The lack of available supply presents buyers with a limited choice and remains a key factor in strong house price growth. The Bank of England’s Agents summary of business conditions 2021 Q3 reported ongoing strong demand for housing across most of the UK and a shortage of properties for sale, which pushed up prices.
More than doubled and no sign of stopping
Adding fuel to the fire!
The central bank, led by Governor Andrew Bailey, will announce next month whether lenders can increase the volume of large mortgages they dish out. Banks are limited in the home loans they can give to borrowers who need more than 4.5 times their salary. These customers must represent no more than 15 per cent of the new loans that banks issue. The Bank of England referenced the rules in an update last month, saying 'there has been little evidence of a deterioration in lending standards or a material increase in the number of highly indebted households'.
UK house prices hit record high as average property tops £270,000
“UK house prices climbed again in October, as the value of the average property grew by 0.9%, an increase of more than £2,500 during the month. With prices rising for a fourth straight month, the annual rate of inflation now sits at 8.1%, its highest level since June.'' Russell Galley, Managing Director, Halifax
Latest ‘Nationwide’ HPI [M.o.M +0.7% & Y.o.Y +9.9%]
“Annual house price growth remained elevated in October at 9.9%, albeit marginally lower than the 10.0% recorded in September. Prices rose 0.7% in month-on-month terms, after taking account of seasonal effects. The price of a typical UK home has now passed the £250,000 mark, an increase of £30,728 since the pandemic struck in March 2020. “Demand for homes has remained strong, despite the expiry of the stamp duty holiday at the end of September. Indeed, mortgage applications remained robust at 72,645 in September, more than 10% above the monthly average recorded in 2019. Combined with a lack of homes on the market, this helps to explain why price growth has remained robust. Robert Gardner, Nationwide's Chief Economist.
Average House Prices Climb £7523 Between July & August 2021
''UK house prices increased by 10.6% in the year to August 2021, up from 8.5% in July 2021. On a non-seasonally adjusted basis, average house prices in the UK increased by 2.9% between July and August 2021, compared with an increase of 1.0% during the same period a year earlier (July and August 2020)'' - Land Registry
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UK House Prices Graph
The UK average house price is now £269,945.
- As of September 2021 the UK Average House Price is £269,945.
- The House Price Index [HPI] now currently stands at 141.6
- Property prices have risen by 11.80% when compared to the same month last year and have increased 2.50% when compared to the previous month.
Source: Land Registry
UK House Price Index
|Source website||Period covered||Average house price||Monthly change (%)||Annual change (%)||Official releases|
|LSL Property Services & Acadametrics (England and Wales)||Apr 21||£341,462||0.70||11.7||April 2021 (PDF)|
|Halifax House Price Index||Oct 21||£270,027||0.90||8.10||Oct 2021|
|Office for National Statistics [O.N.S]||Sept 21||£270,000||2.50||11.8||Sept 2021|
|Zoopla / Hometrack – Monthly National Survey||Sept 21||£236,900||n/a||6.60||Sept 2021|
|HM Land Registry UK HPI||Sept 21||£269,945||2.50||11.8||Sept 2021|
|Nationwide House Price Index||Oct 21||£250,311||0.70||9.90||Oct 2021|
|Rightmove ‘Asking’ Price Index||Nov 21||£342,401||0.60||6.30||Nov 2021|
House Price Index - Greater London
|Source website||Period covered||Average
|Archive /Graph||Peak average
|HM Land Registry UK HPI||July 21||£494,673||2.00||N/A||2.20||£530,409
|Nationwide House Price Index||Q1 21||£482,576||N/A||4.8||6.20||Current Quarter (Q1 2021)||March 21|
|Rightmove ‘Asking’ Price Index||Sept 21||£638,285||0.40||N/A||0.80||Sept 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|
”CEBR predicts that average house prices will be 13.8% lower in 2021 than in 2020.”
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.
UK House Prices 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.
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.
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?