UK House Prices

An Englishman's home is his castle

UK mortgage debt is about 100% of GDP; have our banks really considered the risks attached to their mortgage portfolio?

Our beliefs about how house prices behave are very much driven by our own experience of them. And over our lifetimes house prices have boomed in the UK, particularly after 1995 – since then prices have tripled in nominal terms and doubled in real terms (a rate of growth greater than 5% per year).

Those who have been fortunate to own homes over the last few decades have seen their value surge, creating huge latent wealth.

  • An average home owner has gained over £80,000 in real terms in 15 years
  • Houses are now worth around £4 trillion – over half of all £7 trillion of net wealth held by the household sector.
  • In 1995 houses were worth less than half this amount (in today’s money). This £2 trillion increase is equivalent to all our pension and life assurance wealth

But is it likely that these big increases will continue? And would we want that to happen anyway?

The book explores the history of house prices in the UK , and the key factors that affect them.

There are a number of indices for UK house prices, including:

Halifax House Price Index

Nationwide House Price Index

Department for Communities and Local Government

Rightmove House Price Index

For an analysis of the difference between the key indices see:

http://www.bis.org/publ/bppdf/bispap21p.pdf

There is a considerable amount of information about the English housing market in Social Trends:

Survey of English Housing

Fathom-Zoopla track the discount of properties sold at auction, and their research can be found at:

http://www.fathom-consulting.com/research/fathom-proprietary-indices/auction-price-index/

Information on remortgaging is compiled by the Bank of England, and can be found at:

http://www.bankofengland.co.uk/statistics/hew/2011.htm

And an interesting paper by Kate Reinold about this can be found at:

http://www.bankofengland.co.uk/publications/quarterlybulletin/qb110205.pdf

Adair Turner, Chairman of the FSA’s speech about the mortgage market can be found at:

http://www.fsa.gov.uk/pubs/speeches/at_12may09.pdf

Andrew Haldane’s speech about the cost of the banking crisis in the UK and the subsidy being enjoyed by banks can be found at:

http://www.bankofengland.co.uk/publications/speeches/2010/speech433.pdf