Investing in property

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.

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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 14, ie, 14% more surveyors saw prices rising than falling. The February Halifax UK three-monthly house price index saw a 8.3% 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 14%, 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?February saw UK NMLG rise to 4.9%. 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 5.1% 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 February, the GfK rose to 4. March's Halifax UK three-monthly house price index saw a 8.3% 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? February's UK CPI was flat 0.0% year-on-year, compared to 0.3% the previous month. Meanwhile, RPI was 1.0% higher – down from 1.1% in January. The March Nationwide UK house price index is 5.1% 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 2015: The bubble keeps growing UK house prices are climbing at 5%-6% a year. That's likely to increase further, thanks to record-low mortgage rates. Already overpriced houses are set to become ever more expensive. US houses no longer look especially good value, but Japan and Germany (first-tier cities excepted) do.

See our view on all the major asset classes here.

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

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Compared to gold, UK property is starting to look expensive

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

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The assets to buy now – March 2015

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'Property crowdfunding' may look tempting, but it's very risky

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The assets to buy now – February 2015

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

Looking for property bargains? Don’t turn to the US

Since the sub-prime bust, US property has been recovering nicely. Many experts expect that to continue. But Matthew Partridge isn’t so sure. Here, he explains why.

Stockmarket investing beats property right now – even in London

For an investment that earns a proper yield, forget property – even in London – and look at the stockmarket, says Bengt Saelensminde.

The train crash waiting to happen in new-build property

Thousands of new £1m-plus flats are being built in London. Locals don’t want them – so who’s going to buy? They’ve got bubble written all over them, says Dominic Frisby.

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