Latest: House Price Crash News

Saturday, Aug 13 2022 Add a News Blog Article

Basic Economics ?

Will UK housing continue to stand tall or fall?

I have only just realised how old this is but I'm sure the principles are still sound. To summarise; Nomura reckon the percentage of Household income spent on servicing motgage dept has remained constant/ As interest rates dropped house prices rose to keep the figure constant. Guess what they think will happen to Real House Prices as interest rates rise.

Posted by TenYearsToGetMyMoneyBack @ 10:21 AM 0 Comments

Interest rates vs House Prices

Does Rising Interest Rates always result in a fall in house prices

Some interesting graphs although I guess it also depends on what wages are doing.

Posted by TenYearsToGetMyMoneyBack @ 10:19 AM 0 Comments

First monthly fall from Nationwide

House Price Index July

monthly drop in non seasonally adjusted prices from June to July 2022

Posted by camem’ @ 03:16 PM 0 Comments

YouTube – Scarily accurate & mentions HPC

How to Predict UK House Prices

35 mins long but seriously worth a watch not just because he mentions HPC but because its so very detailed. Must be a member, anyone want to come clean...!

Posted by Derestricted @ 03:52 PM 0 Comments

Inflating the bubble

Mortgage affordability test scrapped by Bank of England

The "stress test" forced lenders to calculate whether potential borrowers would be able to cope if interest rates climbed by up to 3%. Removing the test may help some potential borrowers get loans, such as self-employed or freelance workers. The withdrawal of the affordability test was announced in June but has come into effect on Monday.

Posted by khards @ 10:21 AM 1 Comments

Adds to U.S housing market stress

Fed Raises Rates by 0.75%

12-14 months after the US housing market crashed ours peaked and then crashed too in 08

Posted by Data Dave @ 03:26 PM 0 Comments

“Demand to move is coming off the boil”

Rightmove HPI Data July 2022

“The challenges presented by rising interest rates and the cost of living will no doubt have an effect throughout the second half of the year, as some people reconsider what they can afford. However, there is also anticipation among would-be home-movers that personal finances may become even more stretched in the coming months, with further interest rate rises expected and the energy price cap jumping again in October. Given the political and economic uncertainty at the moment, those who want to move this year, particularly first-time buyers, may seek some financial certainty by locking in longer fixed-rate mortgage terms now before their monthly outgoings increase again.” Tim Bannister, Rightmove’s Director of Property Science

Posted by Data Dave @ 02:30 PM 0 Comments

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Real House Prices

nationwide uk real inflation adjusted house prices

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UK House Prices Graph

The UK average house price is now £283,496. 

  • As of May 2022 the UK Average House Price is £283,496.
  • The House Price Index [HPI] now currently stands at 148.7
  • Property prices have risen by 12.8% when compared to the same month last year and have increased 1.20% when compared to the previous month.

Source: Land Registry

uk average house prices property prices national graph

UK House Price Index

Source website Period covered Average house price Monthly change (%) Annual change (%) Official releases
e.serv (prev LSL Acadata HPI) (England and Wales) Apr 22 £372,436   1.00   10.4 April 2022
Halifax House Price Index Jul 22 £293,221   0.10   11.8 Jul 2022
Office for National Statistics [O.N.S] May 22 £283,000   0.90   12.8 May 2022
Zoopla / Hometrack May 22 £251,550   0.10   8.40 May 2022
HM Land Registry UK HPI May 22 £283,496   1.20   12.8 May 2022
Nationwide House Price Index Jul 22 £271,209   0.10   11.0 Jul 2022
Rightmove ‘Asking’ Price Index July 22 £369,968   0.40   9.30 July 2022

 

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
HM Land Registry UK HPI Sept 21 £494,673 2.00 N/A 2.20 Tick £530,409
(Jan 16)
6.70 July 2021
Nationwide House Price Index Q1 21 £482,576 N/A 4.8 6.20 Cross Current Quarter (Q1 2021) March 21
Rightmove ‘Asking’ Price Index Sept 21 £638,285 0.40 N/A 0.80 Tick 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
SP Rating SP Rating Photo of David Orr 2022 Overvalued by 50% UK Not Stated Tick
”SP Rating has stated that London and the South East of England is overvalued by 50%. They further the statement by saying the rest of the UK is overvalued by 20%”

 

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.

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. 

 
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. Research conducted by hottubbreakaway.co.uk has shown a 230% in UK demand for holidays since the pandemic. Pushing landlords to reconsider the buy to let model for the buy to let for holidays model. Will this local demand push prices up even further in tourist hotspots.

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. 

Our latest articles include where to buy gold bullion or coins to hedge a house prices crash or inflation. What the best crypto wallets are much more. 

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