Investing in property

MoneyWeek magazine

Latest issue:

Magazine cover
Heading higher?

Or are house prices set to fall?

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? October's RICS balance fell to 20, ie, 20% more surveyors saw prices rising than falling. The October Halifax UK three-monthly house price index saw a 8.8% 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 30%, 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?September saw UK NMLG fall to 4.0%. That compares with annual growth of 1.9% two years ago, 5.7% in December 2008 and 11.1% in February 2007. Meanwhile, the October Nationwide UK house price index is 9.0% 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 64,054 in August to 61,267 in September. That's a long way from the peak of 129,168 approvals back in November 2006. Meanwhile, the October Nationwide UK house price index is 9.0% 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 October, the GfK fell to -2. October's Halifax UK three-monthly house price index saw a 8.8% 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 dip in the GfK indicates lower consumer confidence.

The UK CPI (consumer price index) is the most widely-used indicator of our cost of living.

What's the latest? October's UK CPI was up 1.3% year-on-year, compared to 1.2% the previous month. Meanwhile, RPI was 2.3% higher – the same as in September. The October Nationwide UK house price index is 9.0% 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

November 2014: Buy Germany UK house prices rose by 9% year-on-year last month, the slowest gain in nine months. But prices are still very stretched compared to earnings. The US market and second-tier German cities remain better value.

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…

You can’t predict the future. So how do you invest for it?

As the Ukraine crisis shows, investors can never be sure what’s around the corner. John Stepek explains one investment strategy that can give you peace of mind.

A hand up onto the property ladder

Matthew Partridge explains how parents can help their children buy their first property, and the the potential risks involved.

Could this be the cure for Britain’s housing market?

How do we avoid a future meltdown in the housing market? Bengt Saelensminde explains the solution proposed by two Ivy League professors.

Higher property taxes will cool the housing market

Property taxes must rise regardless of who wins the next election. That will weigh on the housing market, says Merryn Somerset Webb. You just have to look at London.

Gamble of the week: A punt on property

The housing market may well fall into a slump, says Phil Oakley. But if the fears are overdone, this property services company could be a good investment.

What some so-called ‘research’ tells us about Britain’s great housing gamble

There’s only one winner when it comes to investing in property, says Bengt Saelensminde – and it’s not the buyer.

Want a quality asset to buy and hold that pays a steady income?

Every investor should pop some property in their portfolio. Real estate investment trusts (Reits) are the way to do it, says David C Stevenson.

Timberrr! Are UK house prices finally starting to topple?

After years of rises, the UK’s house-price bubble may finally be bursting. Matthew Partridge looks at what’s going on in Britain’s property market.

Even if you want higher taxes, Labour’s mansion tax is a really stupid idea

Ed Miliband’s proposed mansion tax is a ridiculous idea, says Merryn Somerset Webb. It is impractical, expensive to collect, and will lead to a whole lot of unintended consequences.

China's economy dips as property weakens

The central bank in China has moved to prevent a slump in the country’s slowing economy.

Showing page 1 of 95