Investing in property

MoneyWeek magazine

Latest issue:

Magazine cover
Walking out on the banks

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 3 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? 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?
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?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.

See our view on all the major asset classes here.

Profit from Britain’s manufacturing revival – invest in the West Midlands

Britain’s manufacturing sector is undergoing a mini-revival. Nowhere more so than in the West Midlands. Matthew Partridge explains how you could profit.

Investing in commercial property

The recovery has had a knock-on effect on commercial property, says Matthew Partridge. Here are the best ways to play the sector.

Shift your house at the click of a mouse

Online-only estate agents have struggled to take off, says Merryn Somerset Webb. But that could all be about to change.

Chart of the week: The rise of the London housing market

Foreign investors viewing London property as a safe haven have driven the capital’s premium over the South East to new heights.

Property-mad Germans rush into 'concrete gold'

A property boom in Germany has seen house prices rise by over a third.

The assets to buy into now - April 2014

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

The London property bubble’s days are numbered

London’s extreme property prices are seriously out of whack with the rest of the country. But this could be about to change, says Matthew Partridge.

Why the property market could be in trouble after the 2015 election

Britain’s booming housing market looks likely to face a tougher time next year. Matthew Partridge looks at what’s on the horizon for house prices.

A new garden city for England

Ebbsfleet in Kent has been earmarked to become home to the first new ‘garden city’ in the country in a century – but it’ll be a drop in the ocean of our housing needs, says Simon Wilson.

Should you join the rush back to buy-to-let?

Buy-to-let investors are once again competing with homebuyers in UK cities. Should you join them, or are we seeing the start of a new bubble mentality?

Showing page 1 of 89
ScreenHunter_01 Mar. 25 09.51

The latest investment opportunities & how you can profit - sign up to our FREE daily email HERE