Have UK house prices turned the corner?

The average price of a house in the UK rose by 0.8% on the year in November, the fastest pace since April.

UK house prices are showing signs of life. Nationwide data shows that the average price of a home rose 0.8% on the year in November, the fastest pace since April. With inflation running at 1.5% and wage growth at 3.5%, that means that prices are slowly falling in real terms and becoming more affordable. The house price/earnings ratio is currently at about 6.8, below its 2017 peak of 7.3 but still well above the long-term average of 4.5.

The slowdown has been most pronounced in London, says Oliver Shah in The Sunday Times. Property prices in the capital dropped 5% from their 2016 peak before a recent low; sales volumes fell 40%. Yet the "bulls are beginning to paw the ground". A 21.1% jump in the number of buyers in October and a sharp rise in the number of estate agents predicting price growth over the next 12 months suggests that the market may have turned the corner. House prices in the city picked up 1% year-on-year in October.

Yet while British house prices are now moderating compared to incomes, it may take some time for first-time buyers to feel the effect, writes Melissa Lawford in The Daily Telegraph. Housing market trends usually start in the most expensive properties and cities and then gradually trickle down into the wider market as people find themselves priced out, explains Hansen Lu of Capital Economics. Where London leads, the rest of the country often follows.

Recommended

UK house prices may be heading for a Boris bounce
House prices

UK house prices may be heading for a Boris bounce

The latest survey of estate agents and surveyors from the Royal Institution of Chartered Surveyors is "unambiguously positive" – suggesting house pric…
16 Jan 2020
Are UK house prices really on the rebound?
Property

Are UK house prices really on the rebound?

The latest house price data from the Office for National Statistics paint a picture of a housing market that is showing signs of rallying. That's not …
15 Jan 2020
House prices are still far too high – but things are improving slowly
House prices

House prices are still far too high – but things are improving slowly

UK house prices crept higher in November, with the strongest growth since April. But the drift towards greater affordability in Britain’s most dangero…
29 Nov 2019
Affordability improves as house prices continue their slow, sleepy decline
House prices

Affordability improves as house prices continue their slow, sleepy decline

With house prices continuing to climb more slowly than inflation or wages, the latest Halifax house price index is a further encouraging sign that the…
8 Nov 2019

Most Popular

Negative interest rates and the end of free bank accounts
Bank accounts

Negative interest rates and the end of free bank accounts

Negative interest rates are likely to mean the introduction of fees for current accounts and other banking products. But that might make the UK bankin…
19 Oct 2020
How will we repay our vast debt pile? Do we even need to?
Sponsored

How will we repay our vast debt pile? Do we even need to?

In his recent articles looking at different aspects of the fixed-income investing world, David Stevenson looked at inflation. Today he looks at a clos…
19 Oct 2020
Buying bitcoin could be the best way to play the remote working boom
Bitcoin

Buying bitcoin could be the best way to play the remote working boom

The coronavirus pandemic has accelerated the move to home working, flexible employment practices and the rise of the “digital nomad”. One of the best …
21 Oct 2020