Where are house prices heading

In the news today nationwide are saying that house prices have surpassed their 2007 peak, read all about it on BBC news website if you don’t believe me http://www.bbc.co.uk/news/business-28108717 so it got me thinking where exactly are house prices heading in the future? If you have read any of my previous posts you will be well aware that I’ve brought a new house not too long ago and I constantly wonder where the price of it is heading. I’m not worried about prices falling as we brought the house at the right price, it needed a lot of work, and still does, new kitchen, bathroom and general decorating but I don’t mind putting in a bit of graft at the weekends to get a decent purchase price in the first place.

 

Anyway I digress, the news of house prices passing their 2007 peak made me take a look at the nationwide house price index calculator. It’s a useful little tool and certainly worth looking at to make sure you’re not getting ripped off when buying a new house. Since I am formerly the spread betting beginner and enjoyed the technical analysis side of trading, I know that it’s a common belief that the past is a good predictor for the future. The theory being since we are all humans and that basic human behaviour never really changes over time. So if like me you think the past may repeat itself then here are some useful statistics if you’re thinking of buying or selling a house any time soon.

 

*FYI all this information is based on the whole of the UK and comes direct from the nationwide website. This year is Q1 2014

  • House prices are up 9.24% since last year
  • House prices are up 18.98% since 5 years ago
  • House prices are up 28.12% since 10 years ago
  • House prices are up 163.98% since 15 years ago
  • House prices are up 247.04% since 20 years ago
  • House prices are up 199.2% since 25 years ago
  • House prices are up 500.25% since 30 years ago
  • House prices are up 908.01% since 35 years ago
  • House prices are up 1694.2% since 40 years ago

 

Just look at those figures again and digest what you’ve just read. Imagine if in 20 years time your house was 247.04% more valuable than today. That would mean an £100,000 house will be worth £347,040, or better yet in 40 years time it’s worth 1694.2% more so that would now be worth £1,794,203. It basically means that anyone who owns a house would all be millionaires in 40 years time. Sounds like it’s impossible hey, but look it’s already happened in the past and there’s a good reason why it will most likely happen again in the future.

 

There is only so much land available in the UK. Forget about green belt and other areas where you currently cannot build, the total amount of land is not increasing. However the population of the UK is increasing. According to the office of nation statistics the population of the UK in 1974 was 56.2 million people, compared with 64.1 million mid 2013. That’s an increase of 7.9 million people or 14% since 1974. That means for every 1% rise in population there has been a 121% rise in house prices. I doubt that pace will continue but my point is there is only so much land and the population just keeps on rising and rising, therefore the demand for houses is rising and in turn with that prices will rise too.

 

I have always seen property as a safe bet for the long term. The vast majority of my money is in the house I live in, another that I rent out in the UK and another that I half own with my parents in Spain. I’m hoping that history will repeat itself and the value of my properties will rise and I make some cash along the way. Of course if you only own your home then it’s all relative as you will always need somewhere to live and if your house price rises then so will all the others and you will never realise any of the equity you have in your house. So if you can afford to do so I would get some more cash into property now and in 40 years you might just be a millionaire, but don’t quote me on that one.

Be Sociable, Share!

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>