Admirers will swoon, and strangers will stand you rounds at the pub. A pretty impressive looking slope — enough to make a minor Alp self-conscious. But note that this is a graph of nominal house prices.

In other words, the prices are not adjusted for inflation. The Nationwide produces a house price index too, and it helpfully offers inflation-adjusted prices from the get-go. Here is its graph of UK real house priceswhich tells much the same story as the Halifax data:.

Are real house prices beginning to bottom out like they did in the s?

Historical UK house prices

Looks like they might be, albeit with a jerkier graph that hints at market dislocations such as emergency interest rates and the restricted supply of mortgages. We might also compare house price inflation to the historical return from other assets, such as shares.

The FTSE was introduced on the January 3rd at a base level of 1, — very close to when Halifax began tracking house prices. On a ish to snapshot, then, it looks like a draw between residential property and shares. But remember that those houses would have required money to be spent on their upkeep, and many home owners would also have splashed out on price-boosting enhancements like loft conversions and extensions. None of those costs are factored into the house price index.

In contrast, the equivalent costs to companies should be reflected in their share prices in the long term. Good spot — and true — but remember that houses also deliver an equivalent, in the form of giving someone somewhere to live or imputed rentin economic terms. Finally, the day-to-day level of the stock market is much more volatile than house prices, making point-to-point comparisons with housing a little dangerous.

In historical terms, UK houses have clearly been a decent long-term investment for the past 40 years. Over shorter spans, though, the data shows that the property market undergoes booms and busts just like any other asset class. Prices have accordingly come down a fair bit in the past few years, especially in real terms, though less so in London.

Arguably, the falls are not as much as we might have expected, given how unemployment has risen, and how difficult it is to get a mortgage. And recently house prices have stabiliseddespite neither of those conditions reversing. Many economists would have predicted a much bigger house price crash, if they were told a few years ago that the UK would undergo its deepest recession since before World War 2, or that so few first-time buyers would be able to get a mortgage.

The declines may well resume when interest rates rise, or if unemployment heads higher. For now though, the failure of house prices to drop as much as many predicted before the crash including me makes me wonder if I underestimated a structural shift to higher UK house prices in real terms.

So did I miss some changed fact in my previous analysis of house prices? As the old socialists used to chant: What about the workers? The house price to earnings ratio. Monevator is a simply spiffing blog about making, saving, and investing money. Please do check out some of the best articles or follow our posts via Facebook, Twitter, email or RSS.

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Remember investing money with P2P lenders like RateSetter or Zopa involves more risk than with cash savings. Type your email and press submit:. While the increase in the FTSE and UK house prices is similar in real terms sincethe impact of gearing through buying a house with a mortgage means that the return on equity from a house purchase would have been much much greater than the return on an investment in the stockmarket over the period.

Given the relative valuation of UK house prices versus the stockmarket today, perhaps the clever trade is to borrow as much money as you can to invest in the FTSE over the next 25 years? Gearing is the main reason why property investment has been so good for the UK public, leaving aside the odd bout of negative e.

Possibly buying an investment trust with a lot of debt on a discount is another option for limited gearing, but you have other risks there. Robert — Indeed, I mean to get hold of a copy of that, I think I linked to it once from my Weekend Reading roundup to that affect. I am minded to think restricted supply is a bigger issue than I used to in the UK, though, and probably does support gradually increasing real prices to SOME extent.

This may be a daft question but is it possible to but an index tracker, or similar product, pegged to the average housing prices? Guy — As Gadgetmind says, make money in eugene companies are talking about residential REITs.

London and Stamford, for instance.

They are available in the US. What does it mean? Also, interest rates are important: As well as indirect exposure since their future revenues is linked to future sale prices, of course. Loads of risk here, of course. Hopefully the market will stay steady throughout call options historical prices Yes it does depend a lot on family situation and other factors.

It is true that someone on the same wage but without a family has a lot more room for manoeuvre. If a computer is five times more powerful and half the price of five years ago, it seems to me inflation is at least partly a matter of opinion!

If only I could eat and drink computers, maybe live in a computer and drive to work in one life would be terrific value. Thanks for publishing this: I have been on a mission for sometime to convince people around me that buying houses is fine but they are homes not investments.

And that rushing to pay the mortgage off feels psychologically right but is not a financially sound decision. The historical data you present illustrates this beautifully! The fundamental reason why house prices have not collapsed in the UK as they have in the US, Ireland and Spain must be that we have not built enough houses for the demand.

Compared to all those, we are a small island with quite a large population density, strong NIMBY controls on property development and little public housing.

We also have a mentality of owning our own houses filetype pdf forex rental contracts are mainly short term. So people have little alternative really to trying to buy. When occurred I never though that house prices would collapse by much more than they have already.

Therefore the slump is not so much in prices but more in numbers of trades. Which is bad news for estate agents. But call options historical prices the moment interest rates are pretty low and likely to stay that way for a long time as the UK is re-entering recession or at best flat-lining. John — Forgot to reply and say I have come around to this way of thinking a bit, too.

However events including incredibly cheap debt for those that can get it have proven that constrained supply does seem to have underpinned prices more so than, say, the US or Ireland, where massive over-supply clearly egged things over cliff.

I thought they looked like attractive investments in late November, and still feel the same. Anyway, the net result is real house prices and prices to incomes probably do warrant having trended higher. The question is to what extent? Yes, we did, and it was nice. I then paid off the remaining mortgage in double-quick time. What I fear is buying into a London market that is already back at or above its highs.

The Investor — no-one can ever can ever call the highs or lows of any markets, but the London property market does seem to be defying gravity. Anyway, at least you got into UK Commercial Property UKCM at a decent price — BestInvest keep failing with both real-time and limit orders, and blame liquidity, but my other online accounts are happy to buy take orders.

The same constraints on supply exist as in London, and the same price pattern is emerging. There is many a high street around with a few or more boarded up shops but few with boarded up houses except in the poorest of areas.

People who lose their jobs will — at least in the short-medium term — still live in the same house and have some support for this.

Or rents can be driven down if a landlord is at all sympathetic to harsh rescue dogs for sale in nj conditions. We are fortunate to live in an area where I think house prices have hardly dipped at all which all goes to show how variable things are in the UK, as you point out for the US. I am looking at properties and trying to see how the asking price compares to the price that it was when last sold so I am finding this information of great use to me.

I am not a mathematician so the charts are terrific. I recently wondered about the real lifetime cost of UK property purchase — in relation to lifetime net earnings. So in 70s wages doubled every 4 years — compared to 30 years today. London is also a different beast to the rest of the UK. I need to find out the value of my present property as it was at the end of March ; where would I go to get that info please?

Yes it is a two year old post but the gap has worsened the picture if anything. We have had all sorts of boosts to house prices which have not ended up with a boost to house building, as I would expect — house building takes time to start and is no incentive when land prices are going up for builders to build or develop on land that they own — why bother when the prices are increasing anyway?

Permission should be time-limited — use it or lose it — which would concentrate their minds as the price of land substantially would drop if they let the permission to expire. We need at abouthouses a year just to replace broken houses 23 million units typically lasting yearslet alone population increase that will require at least another 50, houses a year just to stabilise the market. No fiddling with the demand side of the equation is going to do that.

It really is stupid. Is there a follow on article from here or any recent recap of the situation? Any advice or resources for working out if a specific property is a good punt? To be clear this is for a home, not an investment but I want to avoid negative equity.

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I makes no representations as to the accuracy, completeness, suitability or validity of any information on this site and will not be liable for any errors or omissions or any damages arising from its display or use. Full disclaimer and privacy policy. This site uses cookies. Historical UK house prices by The Investor on January 5, Since the Halifax began tracking historical UK house prices in The graph shows UK house prices in blue, and London prices in red: In approximate real terms, according to Halifax, since Here is its graph of UK real house priceswhich tells much the same story as the Halifax data: Click to enlarge this graph of UK real house prices.

Receive my articles for free in your inbox. Type your email and press submit: SB absolutely — has to be a factor its a bit of brutal irony for the feminists that their success in the workplace has come at a substantial cost to the option of having a family. Gadgetmind — Nice work, well done! The absence of inflation based debt deflation makes a massive difference.

I concluded that a purchase as a baseline of say, cost in and today. Hi, I need to find out the value of my present property as it was at the end of March ; where would I go to get that info please?

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