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

Why are house prices so high? And what could make them more affordable?
House prices

Why are house prices so high? And what could make them more affordable?

House prices in the UK are at an all-time high – but they just keep going higher. And that’s not because of rich foreign buyers or a lack of supply, s…
23 Mar 2021
Why the Budget means house prices are likely to continue higher this year
Budget

Why the Budget means house prices are likely to continue higher this year

For a while, it looked like house prices might cool off a little this year. But after the Budget, that seems unlikely. John Stepek explains why.
4 Mar 2021
Pandemic no barrier as house prices rise faster than at any time since 2014
House prices

Pandemic no barrier as house prices rise faster than at any time since 2014

December saw the biggest annual rise in house prices for over seven years, as buyers rushed into the market to be sure of completion before the end of…
19 Feb 2021
The house price boom of 2020 shows signs of slowing in 2021
House prices

The house price boom of 2020 shows signs of slowing in 2021

Last year’s big rises in UK house prices looks to be running out of steam, reports Nicole Garcia Merida – 2021 could see a very different picture.
12 Feb 2021

Most Popular

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?
Bitcoin

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?

Dogecoin – a cryptocurrency created as a joke – has risen by more than 9,000% this year alone. Saloni Sardana looks at how something that began as an …
19 Apr 2021
The FTSE 100 has clawed back above 7,000 – how much higher can it go?
UK stockmarkets

The FTSE 100 has clawed back above 7,000 – how much higher can it go?

The FTSE 100 index has risen to over 7,000 for the first time in over a year – it now sits just above where it was in 1999. But its era of neglect cou…
19 Apr 2021
The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021