UK House Prices
by Alastair Taylor
A quick look at graph of house prices shows that there has been a massive percentage increase in the price of UK houses since 1960. This growth in UK house prices has been a steady exponential and will often be used to show how investing in property will always produce a positive return in the long run. Even during the housing crashes of the 70's, 80's and 90's the actual price of a house hardly fell at all. But this is not the full story for housing prices in the UK...
Graph of the price of houses since 1960
These house prices do not include inflation!
For a realistic view of the price of houses in the UK you need to take inflation (the cost of living) into account. House prices may have gone up over 12,000% since 1960, but the price of a loaf of bread has actually gone up around 3,000% in the same time. No-one is suggesting that you pile all your money into bread to try to achieve long term Capital growth.
The following chart takes into account UK inflation since 1960 and so shows the real increase in the cost of houses in the UK. This chart shows that house prices have not increased as drastically as you may think. House prices have increased by a factor of 4 in real times since 1960. The real value of UK houses has dipped several times. The largest decrease in house prices was in the mid seventies, but there have also been house prices crashed in the early eighties, the early nineties, and also way back in 1950.
What does the future hold for house prices in the 21st century...?
Graph of real increase in price of houses since 1960
If you are interested in buying a home check out our Mortgage Comparator
Alastair Taylor
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Date Added: Monday 5th May 2008
"A logarithmic chart would be more helpful. If you look, house prices are roughly doubling every twenty years, aren't they? There has been no exponential recent growth in prices. It is the absolute price but the rate of doubling that matters and that seems to be very approximately a constant."
M Treadwell
Date Added: Tuesday 29th April 2008
"2004 Price crash - it seems to me that the financial models of these situations are generally poor. Never predicting a significant change from the current trend. Hence, they never seem to predict either a boom or bust. In 2004 people simply thought house prices were overcooked. Which they were and still are compared to long terms trends. However, one can now compare the current situation on a number of pointers with that around 1990 and the market and economy look worrying"
Admin
Date Added: Monday 28th April 2008
"What happened to the widely predicted price crash in 2004?"
Matthew
Date Added: Thursday 17th April 2008
"I would be interested to know what the average house price was in the 1950's in the uk. Where did you get your data?"
Carolyn Doherty
Date Added: Saturday 5th April 2008
"Very informative - nice to read something balanced"
AJA
Date Added: Monday 24th March 2008
"where\'s the chart referred to?"
bokkie
