When we see reports on the housing market, we often just look at year-on-year property price comparisons. But when you think about it, that just doesn’t work for buyers and sellers and that’s because many people today stay in their homes for around 20 years.
If we look back over the past two decades, property price growth at a national level has actually been quite steady, despite the highs and lows we have seen with the Credit Crunch, the Pandemic and the Liz Truss disaster in 2022.
Over the last 20 years, average annual house price growth ranged from 2.5% in Northern Ireland to 3.6% in Scotland. This month’s year-on-year figures are very much in line with that long-term trend: prices are up 2% in Wales, 2.7% in England, and 3.3% in Scotland.
Northern Ireland shows a slightly higher year-on-year increase of 5.5%, but it’s worth remembering that prices there are still 18% lower than at the market peak in 2007/8.
So for most people who’ve bought a property in the last 20 years, the market has been relatively stable.
However, when we compare property prices to inflation, the story changes. Property values, on average, have only just kept pace. Since 2005, cumulative inflation has been 71%, with an average annual rate of 2.9%.
By comparison:
– England’s average annual property price growth is 3.1%
– Scotland’s is 3.6%
– Wales has seen 2.7% growth
– Northern Ireland trails at 2.5%
This shows that property prices in England and Scotland have just about kept pace with inflation, while those in Wales and Northern Ireland have lagged behind.
The commonly repeated claim that property prices have significantly outstripped inflation is misleading – it’s based on data before 2005, particularly between 2000 and 2005 when prices doubled in many areas.
For most homeowners selling after 20 years, their property is now worth roughly the same in real terms as when they bought it.”
For most homeowners selling after 20 years, their property is now worth roughly the same in real terms as when they bought it. That doesn’t mean they haven’t made money – those with a mortgage have likely seen gains. But for cash buyers, the real-term return is effectively break-even.
Northern Ireland housing market
“Northern Ireland remained the top performing area with annual house price growth of 9.6%.”
“Northern Ireland once again lead the fastest annual property price inflation, with average property values up +6.5% over the past year (down from +7.9% last month). The typical home now costs £216,496, though prices remain well below the UK average.”
Scottish housing market
“Scotland and the South West indicated the largest price falls.”
“Scotland recorded annual price growth of +4.5% in September to an average of £215,588.”
Welsh housing market
“In Wales, property values rose a modest +1.9% year-on-year to £227,845.”
Regional property price tracking
We are, in theory, seeing some reversal in fortunes for property prices across the regions over the last few months. And you can pretty track what’s happening to prices for newly advertised properties versus those that completed – potentially locking in prices 4-6 months ago (back to April 25). Rightmove leads the year on year ‘falls’ with 4 regions showing prices to be down.
In contrast, the Land Registry are showing rises in all regions, ranging from 0.7% to 7.9% in the North East – so a vast difference to figures from Rightmove. However, they measure the market very differently and the timeframe is six months apart, so it shouldn’t be a surprise!
There is a big but though with this commentary! When we say falls, they are insignificant. Yorkshire and Humber shows prices down by -1.4%; West Midlands by 1% and the South West by 0.6%.
Overall, looking at all the indices this month, we are continuing to see an unusually favourable North / South divide where property prices are seeing good growth in the Midlands and the North and the in the South and East, property prices have clearly ‘hit’ an affordable ceiling and aren’t likely to move forward much until Bank Base Rates fall further.
Commentary on the regional performance by indices
“The North West is the top regional property market growth leader with an impressive year-on-year gain of 3.7%, followed by Yorkshire at 3.5%. Meanwhile, London is now the worst regional performer with a pitiful annualised loss of 0.5%.”
“The widening north/south divide in prices and activity reflects affordability constraints and the impact of higher stamp duty costs since April, both of which are greatest in southern regions.
“As such, house price inflation remains weakest across the south, with rises of less than 0.5% in London, the South East, the South West and the East of England.
“All other regions are seeing higher annual house price inflation, with 3.1% growth in the North West and the highest growth of 7.9% in Northern Ireland.
“In southern regions, where both supply of homes and affordability pressures remain greater, the average time to sell has stretched to 39 days. This is 11% longer than the national average. As a result of this, house price growth is sitting as low as 0.3% in the South East and South West.”
“In England, the North East, recorded the strongest annual growth with prices up +4.8% to £180,443, followed by the North West (+3.9). The South West saw a second consecutive price fall by -0.2% over the past year (previously -0.7%) with prices now £303,067.
“Meanwhile, prices are up only very slightly on the year in London (+0.6%) and the South East (+0.2%), with the capital the most expensive part of the UK, with an average property value of £543,497.”