UK Savers Pay for house price increase in March 2010

House prices increased by 0.7% in March 2010 according to the Nationwide. This figure is seasonally adjusted. The actual increase was 1.98%
You might wonder who is paying for these expensive houses in march? Well it’s you, well done. It’s not the owners as they have very low interest rates and inflation is reducing their debt. Nice for them but someone has to pay for that and fortunately there is you. As long as you don’t complain then things will go on like they are.

UK savers petition the government

It’s about time we started protesting.
This is a start

http://petitions.number10.gov.uk/Savingsrate/#detail

but I really think we should go to the next meeting of the bank of England.

This is another website. We need more of this
http://www.saveoursavers.co.uk/

UK House prices; the last two bubbles and Inflation.

As promised, I have got hold of UK house prices since the peak in 1989 and have a plot of raw house prices (Halifax) and inflation adjusted from 1989 to February 2010. The plots are at the foot of this post. Interestingly you can see that house prices have fallen by more this time (21.9%) than in the last crash (14.7%). Incidentally today’s prices are 17.5% below the August 2007 peak.


The last crash resulted in a bounce along the bottom for several years and did not return to it’s 1989 peak until March 1998. More interestingly however, prices adjusted for inflation (CPI) did not return to their peak until February 2002.

It would be unwise to try and predict where prices will go this time. They could bounce along the bottom for a few more years yet, as they did after the last crash. However one thing that we can perhaps be more certain about is that if we adjust for inflation then prices will not return to 2007 levels for a few years longer still.

House prices fall by 0.3% in February (Land Registry). London prices fall 0.45%

Houses prices were down 0.3% in February according to the land Registry. The average number of transactions per month (over September to December 2009) was 63,687 compared to an average of 39,892 for the same period in 2008. So volumes are up, which should be good.

Some might be interested to know that prices in London have shown the first drop since May 2009. Overall prices in London dropped by 0.45%. This was consistent over all property types (Detached, Semi-detached, Terraced, Maisonette/Flat, ALL)

The Budget; Stamp duty threshold 250,000. THE DETAILS

If you have questions on the new stamp duty relief this Q&A technical note by HM revenue and Customs should cover them:

http://www.hmrc.gov.uk/budget2010/sdlt-qa-tech-1545.pdf

The Budget; Stamp duty threshold 250,000

The stamp duty holiday last year did not help house prices. See graph in previous post. House prices went up after removing stamp duty at 175,000 last year..

A better idea would be to make the seller pay stamp duty. There would be no loss of income for the government. If you are moving then there is no loss as you would have to pay anyway. First time buyers or those moving up the ladder would benefit and those living in more expensive houses would pay more.

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)

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plot 1; UK House prices since January 1991 (1993 = 100)
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plot 2; UK House prices since January 1991 adjusted for CPI (1993 = 100)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plot 3; UK House prices since January 1991 adjusted for RPI (not including mortgage interest)
 (1993 = 100)