House prices up?
I read recently that domestic property prices in the UK increased by an average of 1.8% over the last month. That seemed surprising, given the economic situation but, according to a friend who is “in the know”, it isn’t a meaningful trend because the volume of sales is still small.
… or down?
However this rise followed “a big drop” the previous month, according to the Halifax. (I think it was 0.7%) Such a wide variation from month to month would seem to support the fact that these are not really meaningful trends. The less volatile three-month index showed a drop of 1.2% in the quarter.
First-time buyers still priced out
When last month’s drop was announced, a newsreader on BBC Radio 4 actually added: “however, first-time buyers are not taking advantage of the drop in prices”. Well, is that so surprising? Even if that month’s price drop had been a meaningful statistic, which it wasn’t, 0.7% is not much of a drop.
More importantly, UK property is still greatly overpriced. Who says so? The “Economist” magazine’s survey of international house price comparisons, taken in turn from official stats on price/rent ratios. According to the table the magazine published in late October, average UK property prices increased by 3% year-on-year; more importantly, property here is 32% overpriced.
To compare countries’ housing data over time, including price-to-rent ratios, see www.economist.com/houseprices
To view my guide to personal debt, “Back to the Black: how to become debt-free and stay that way”, go to www.back-to-the-black.com