Higher property taxes could put the dampeners on London’s rising housing market, says Merryn Somerset Webb
UK house price indicators
We watch five indicators, all of which have proved useful guides in the past. These include the RICS Housing Market Survey and data on both mortgage lending and mortgage approvals. Consumer confidence is another useful data point we keep an eye on.
You can read in detail what each indicator suggests for UK house prices using the tabs above.
What's the latest? November's RICS balance rose to 58, ie, 58% more surveyors saw prices rising than falling. That's the highest level since 2002. The March Halifax UK three-monthly house price index saw a 8.7% year-on-year rise.
What does this mean for UK house prices? The RICS survey leads the Halifax index by around six months. With a balance of 54%, could Britain's housing market be heading for bubble territory?
What's the latest?February saw UK NMLG rise to 1.6%. That compares with annual growth of 1.9% two years ago, 5.7% in December 2008 and 11.1% in February 2007. Meanwhile, the March Nationwide UK house price index is 9.5% higher year-on-year.
What does this mean for house prices? This long-term collapse in NMLG suggests UK house prices are standing at the cliff face. If they follow net lending trends, residential property values could slump by over 15%.
The Bank of England's monthly 'mortgage approval for house purchase' figures are another useful forward indicator of UK housing market activity.
What's the latest? BoE mortgage approvals for house purchase fell from 76,753 in January to 70,309 in February. That's a long way from the peak of 129,168 approvals back in November 2006. Meanwhile, the March Nationwide UK house price index is 9.5% higher year-on-year.
What does this means for UK house prices? BoE mortgage approvals for house purchase lead annual percentage changes in the Nationwide UK ‘all houses’ price index by some four months. But with Britain’s recovery still fragile, a slide in house prices is still a possibility.
This gauges the monthly mood swings of Britain's consumers. It "tracks changes in personal finance, the general economic situation, inflation, unemployment, the current purchasing climate, and consumer spending and saving", say its compilers GfK/NOP.
What's the latest? For February, the GfK stayed at -7. The March Halifax UK three-monthly house price index saw a 8.7% year-on-year rise.
What does this mean for UK house prices? This indicator leads the Halifax UK three-monthly house price index by some four months. The recent uptrend in the GfK indicates rising consumer confidence.
The UK CPI (consumer price index) is the most widely-used indicator of our cost of living.
What's the latest? March UK CPI was up 1.6% year-on-year; down from 1.7% the previous month. Meanwhile, RPI was up 2.5% on a year ago, compared to 2.7% in February. The March Nationwide UK house price index is 9.5% higher year-on-year.
What does this mean for UK house prices? Higher CPI normally means higher interest rates. Despite the fall in UK CPI since 2010, inflation is still too high. It may drop more, but the historic relationship of higher CPI = less UK house price inflation will return at some point.
Property: the MoneyWeek view
April 2014: London goes wild With affordability in the UK as a whole looking stretched, we would continue to focus on the US. In Germany, the major cities look overheated, but it's still worth exploring the smaller ones.
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