House prices in UK

House prices in UK, since the last crisis in 2008, are increasing. The statistics provided by the ONS report that:

  • House prices in Britain rose by 7.7% in the year until November 2015, compared with 7.0% in the year until October 2015.
  • House price annual inflation was 8.3% in England, 1.3% in Wales, in Scotland, 0.4% and 4.6% in Northern Ireland.
  • Annual increase in house prices in England was driven by annual increase in the East (10.2%), the Southeast (9.8%) and in London (9.8%).
  • After excluding London and the regions of the south-eastern part of the country in the UK, house prices increased by 5.8% in the 12 months until November 2015.
  • The average house prices increased by 0.8% in the period from October to November 2015
  • In November 2015, prices paid by buyers were, for the first time, 7.4% higher than the average in November 2014.
  • For owners of apartments, prices increased by 7.8% in the same period.

House price index

Average house prices rose by 7.7% in the year until November 2015, compared with 7.0% in the previous year (Figure 1). The average price of homes in the UK in November 2015 amounted to £ 288,000.

Annual house price rates of change, UK all dwellings from January 2004 to November 2015

Annual house price rates of change, UK all dwellings from January 2004 to November 2015

In November 2015, the adjusted house price index increased by 0.6% compared to the previous record level in October 2015 in order to reach a new record of 221.5 (see Figure below). UK Index is 19.4% higher than the last peak of 185.5 in January 2008

Index values, UK all dwellings from January 2004 to November 2015

Index values, UK all dwellings from January 2004 to November 2015

House price index based on the main part of the UK

In the year to November 2015, average house prices rose by 8.3%, in England (up from 7.4% in the year until October 2015), 1.3% in Wales (an increase of 1.0%), 0.4% in Scotland (decrease of 0.9%) and 4.6% in Northern Ireland (decrease of 10.3%).

All dwellings annual house price rates of change by country, January 2004 to November 2015

All dwellings annual house price rates of change by country, January 2004 to November 2015

Value of house price index according to the region of the UK

The rate of increase in house prices again varies in different regions of England of 9 November 2015. The highest annual increase was in the East and amounted to 10.2% (decrease from 10.4% in the year until October 2015), and the next biggest increase was in the region of south-east England (9.8% growth in the year until November 2015, compared with 9.5% in the year until October). In London, prices rose by 9.8% in the year to November 2015 (an increase of 7.7% in 2015 to October). North East had the lowest annual growth regions increased by only 0.4% in the year until November 2015 (decrease from 2.9% in the year to October).

House prices in the UK rose by 5.8% in the year until November 2015 with the exception of London and the South East,, compared with 5.6% in the year until October 2015

All dwellings annual house price rates of change UK, country and regions

All dwellings annual house price rates of change UK, country and regions

Mix-adjusted house price index by selected regions from January 2004 to November 2015

Mix-adjusted house price index by selected regions from January 2004 to November 2015

The above graph clearly shows how house prices have changed since 2004. The first what stands out is that prices in London significantly began to gallop since mid-2009 and they moved with those of other parts of the UK. What does it mean? That the market in London speculative bubble arrived. And, a purchase of a house in UK has become not possible for normal people.

Value of house price index in countries and regions

The average house price in November 2015 reached £ 302.000 in England and in Wales it was £ 173,000, Scotland – £ 195,000 and £ 158,000 in Northern Ireland.

In November 2015, London was still the most expensive region with the highest average house price – £ 537,000, and in the Northeast the average home value was the lowest in the country and amounted to £ 157,000. Areas like London, South East and East have higher prices than other parts of the UK.

When we will exclude London and the south-eastern region from the averange, the average in the UK will reach £ 219,000.

Mix-adjusted average house price UK, country and region

Mix-adjusted average house price UK, country and region

If someone is in this situation that needs to buy an apartment in London I am not envy, because it certainly will be forced to overpay. Below is a nice map from the Rightmove website, which clearly shows how prices are formed in different parts of England.

House prices in UK

House Price Index

House Price Index

It may seem that prices will fall and you will be able to buy much cheaper. Unfortunately, in the era of cheap money that is generally available cheap loans, it is possible that prices will continue to rise. The only things that can be changed are prices in London. I personally think that the market is overheated, and sooner or later will have to be corrected, but will it be? Therefore, it is worth to see what was the index of home prices in the long run. Buying a house in the UK is currently subject to the risk that we will overpay in areas such as London and the southeast.

House Price Index from 1983

House Price Index from 1983

The above graph shows that prices were increasing all the time and there were periods of “downtime”, but the prices never went down. This is due to the fact that in the era of so-called, fiat money, our money constantly loses their value.

For comparison, the following chart shows the same indicators in Poland and in the UK.

Poland and UK Housing Index

Summary of the entry about the house prices in the UK

If you want to buy a house, you should find a cheap mortgage and if it will be your first property it is worth considering the program Help to buy. Currently, loan in the UK is easily accessible.

House prices in UK
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