UK Savers Revolt: UK house prices since 1991 adjusted for Inflation

To add to the previous post here is the data going back to January 1991 (as far back as the nationwide will go). I also have February 2010 data as the inflation figures just came out. See the foot of this post for three house price plots (Unadjusted, Adjusted for CPI, Adjusted for RPI)

It is interesting to note that the unadjusted figures show that house prices were flat right up to around 1996/1997 when they were seen to rise. However after adjusting for inflation it is clear that in real terms prices kept falling and did not start recovering until gone 1999. As we don’t have the data here for 1989 (the peak of the boom at the end of the 80’s) it is not clear here when prices actually returned to peak levels but it is likely to be around 2001. I hope to have an update on this when I get some earlier data.

A note then for the current situation; if you only look at the raw house price index then it seems that prices crashed in 2007/2008 then recovered in spring 2009 and have recently levelled off. However in real terms they are now starting to fall a little.

So perhaps it will be a good while before house prices reach anywhere near the peak of 2007. The effect of inflation is often forgotten when people value their homes and while someone will not go below (say) 300,000 this year they will be happy to sell it for 300,000 in two years. They will of course have paid off some equity in the two years but inflation does help relieve the pain of a drop in prices.

(The house price index was taken from the nationwide (1993=100) and inflation figures were taken from the office for national statistics)