Investing in property

MoneyWeek magazine

Latest issue:

Magazine cover
Prime location

The best property buys in the eurozone

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

UK house price indicators

To find out where Britain's house prices are heading next, we've hunted down what we believe are the best leading indicators for Britain's housing market. And for now, they mostly suggest that prices are heading for further falls.

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.
The RICS Housing Market Survey is arguably Britain's best house-price predictor. It's a monthly measure of how many surveyors are seeing UK house prices rise compared with those reporting falls.

What's the latest?March's RICS balance rose to 21, ie, 21% more surveyors saw prices rising than falling. The April Halifax UK three-monthly house price index saw a 8.5% 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 21%, will Britain's housing market keep climbing?
The Bank of England provides monthly data on UK net mortgage lending growth (NMLG). Historically this has proved a handy guide to house prices.

What's the latest?March saw UK NMLG rise to 5.0%. That compares with annual growth of 1.9% two years ago, 5.7% in December 2008 and 11.1% in February 2007. Meanwhile, the April Nationwide UK house price index is 5.2% 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%.

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 March, the GfK rose to 4. May's Halifax UK three-monthly house price index saw a 8.5% 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 rise 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's UK CPI was flat at 0.0% year-on-year, the same as the previous month. Meanwhile, RPI was 0.9% higher – down from 1.0% in February. The April Nationwide UK house price index is 5.2% 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

May 2015: Look abroad for bargains Housing has featured prominently in the election campaign. Labour's proposed stamp duty exemption for first-time buyers, like the Help to Buy scheme, would boost demand and prices in an already overpriced market. Look overseas for better bargains in residential property.

See our view on all the major asset classes here.

[FREE REPORT] UK property: Is it finally time to sell?

Get your FREE report to give you the full picture on what’s going on in the market now – and where it could be heading…

Three bubbles that are ready to pop

Cheap money, artificial credit, and zero interest policies have created all sorts of bubbles since the financial crisis of 2008. Dominic Frisby looks at three that are ready to pop.

The assets to buy now – May 2015

Asset allocation is at least as important as individual share selection. So where should you be putting your money? Here’s May’s take on the major asset classes.

Election controversy of the week: Labour’s rent controls

Labour’s plans to cap rent increases have been criticised by both renters and landlords alike.

It's election time – hang onto your wallet

Who will win the general election? And what will it mean for you and your money? John Stepek and Matthew Partridge report.

Election 2015: could rent controls pop the housing bubble?

Ed Miliband’s rent controls brainwave won’t do anything to lower rents for hard-pressed tenants, says John Stepek. But it might hit house prices.

Election controversy of the week: Cameron’s Right to Buy

The Conservatives have announced that they would extend the Right to Buy council houses at up to a 50% discount to tenants of housing associations.

The assets to buy now – April 2015

Asset allocation is at least as important as individual share selection. So where should you be putting your money? Here’s April’s take on the major asset classes.

China props up housing market

The Chinese authorities have announced measures to shore up the sinking property market.

Compared to gold, UK property is starting to look expensive

At current prices, it takes 232 ounces of gold to buy the average UK house – up 60% in the last three years. Here, Dominic Frisby compares the two markets.

Here’s why you should avoid the most popular asset class in Britain

Investors’ appetite for stocks is nothing compared with their love for property. But anyone expecting big gains from bricks and mortar could end up very disappointed, says Matthew Partridge.

Showing page 1 of 98