UK house prices now up 9.0% year-on-year
The Nationwide, the UK’s largest building society, released data this morning showing that UK house prices rebounded in March from February’s dip. The average UK home now costs £164,519, up 9.% from year ago levels. Much of the increase has been driven by supply-demand imbalances with a dearth of properties coming to market in the poor economic climate of 2009.
The Halifax has yet to release data. However, their data have been tracking Nationwide’s for the past few months after a divergence early last year. The chart from the BBC below shows the two price indices. Note the slowing in year-on-year house price appreciation in Nationwide’s March data.
Below is a video in which Nationwide Chief Economist Martin Gahbauer gives his view on what the data mean for the UK housing market. He notes the renewed north-south divide in house price inflation. London is booming again as a weak sterling has attracted buyers. It certainly helps that the City is doing well again. I think this is the main reason for London’s out performance.
More data from the Nationwide below.
Source
House Prices Reverse February’s Dip – Nationwide
About Edward Harrison
- Nationwide: UK house prices down 15.9% from last year 6 Jan 2009
- Nationwide: U.K. house prices down 17.6% in year to Februay 26 Feb 2009
- UK: House price fall moderates, prices still down 13.9% in year 27 Nov 2008
- UK house prices up again in September 6 Oct 2009
- UK house prices now 9.9% above trough 4 Feb 2010
I am surprised how wrong the figure for long term UK House price to earnings ratio is. It has been closer to three not four times earnings. Though because the graph goes back to 1980 it looks better. It still shows the UK property market as substantially overvalued, though not as overvalued if they accept the rate of three times earnings.
After the early 1990s bubble popped, banks such as Barclays would only loan against property at 3x income. Prices are too high. Grantham sees 40% loss eventually.
Yes UK house prices still have further to fall. I expect another 30% now. If a panic sets in then expect a much bigger drop than that. Excessive fiscal tightening will probably be the trigger.