Latest: House Price Crash News
Thursday, Apr 15 2021 Add a News Blog Article
CPI down from 0.9% to 0.7%
What Happens to House Prices during Recessions?
More Money for Houses
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.
one in 10 owner-occupiers do not have enough savings to cover even a single month mortgage payments
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.
But optimism aka greed prevails
'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'
As expected, anything for the bubble
Annual house price growth slows for first time in six months as end of stamp duty holiday approaches
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 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||Feb 2021 (PDF)|
|Halifax House Price Index||Mar 21||£254,606||1.10||6.50||05/02/2021 (PDF)|
|Office for National Statistics [ONS]||Jan 2021||£249,309||0.4||7.5||17/02/2021 (PDF)|
|Zoopla / Hometrack – Monthly National Survey||Feb 2021||£226,400||0.00||4.1||Link|
|Land Registry Monthly Report||Jan 21||£249,309||0.4||7.50||17/02/2021|
|Nationwide House Price Index||Mar 21||£232,134||0.20||5.70||March 2021 (PDF)|
|Rightmove ‘Asking’ Price Index||Mar 21||£321,064||0.80||2.70||March 2021|
House Price Index - Greater London
|Source website||Period covered||Average
|Archive /Graph||Peak average
|Land Registry Monthly Report||Jan 21||£501,320||1.06||N/A||5.3||£530,409
|Nationwide House Price Index||Q1 21||£482,576||N/A||4.8||6.2||Current Quarter (Q1 2021)||March 21|
|Rightmove ‘Asking’ Price Index||Mar 21||£624,975||0.50||N/A||2.20||£649,864
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.
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.
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?