UK Housing Market Stats and Graphs

A look at the main UK housing market data.

  1. House prices
  2. Affordability of housing
  3. Interest rates
  4. Supply of housing

House price inflation

house-price-inflation-90-2013

Nationwide data

  • The price of a typical UK house increased by 1.1% between May 2012 and May 2013
  • Prices 0.7% lower than one year ago
  • Price of a typical home is £167,912 (June 2013)

UK House prices in past decade

uk-house-prices-2001-2013q2

House prices in the post-war period

house-prices-1952

2. Affordability of Housing

First Time Buyers – House Price to Earnings Ratio

ftb-house-price-earnings

For UK first time buyers, the average house price is 4.4 times average earnings. In London, house prices are 6.8 times average earnings, whereas in the north, house prices are only 3.2 times average earnings.

Affordability of Mortgage Payments

mortgage-payments-income

Mortgage payments as % of income reached in a peak in late 1989/90 due to record high interest rates. Rising house prices meant that the % of mortgage payments grew in the 2000s. However in 2009, interest rates were cut to 0.5% leading to lower mortgage payments for homeowners.

Affordability index

The nationwide also produce an affordability index. Index base year 1985=(100)

affordability-index

Interest rates in UK

base-rates-bank-rates-mortgage-rates

interest rates at the Bank of England

There has been a dramatic fall in Bank of England base rates (which has continued to remain at 0.5%) but the bank’s standard variable rates have fallen at a much lower rate. See more at explaining the gap between base rates and commercial lending rates.

house-price-income

Source: ONS mortgage survey 2012

Further reading: UK housing affordability

4. Housing Supply

In the post war period, construction of local government housing increased supply. Home builds reached over 400,00 a year in the late 1960s. However, from the 1980s, the government retreated from building houses, leaving it to the private sector and a small contribution from housing associations. Due to strict planning legislation, the supply of housing has failed to meet government targets.

housing-completions

Understanding supply constraints in UK Housing market

For example, in 2007, the government estimated they would need to build 240,000 homes a year until 2016, to keep up with growing demand. However, after the credit crunch, housing completions fell to 100,00 a year

 

1

housing-supply

Source: House building Quarterly Dec 2012

supply

more data on housing market supply and future population trends

Housing Construction

housing construction

UK housing construction. see also UK construction

Type of Property

housing

Between 1950 and the early 1980s, the percentage of homes which were bought, steadily increased, and the renting sector fell. Mrs Thatcher encouraged this trend in the 1980s, with a policy of encouraging home ownership. Mrs Thatcher allowed the sale of council properties to their tenants. The stock of social housing has fallen since the early 1980s.

However, the trend in home ownership has been reversed in the last decade, due to declining affordability of home ownership.

local-housing

local authority housing stock has plummeted due to the popular right to buy scheme and transfer of housing stock to housing associations.

source: JRF Housing & Neighbourhood studies

Historical House Prices

house-price-inflation-1970-2013

The volatility of UK house prices. Though it should be noted these statistics show nominal house price changes. In the 1970s, high inflation rates magnified the nominal house price rises.

House prices adjusted for inflation

real-trend-house-prices

Even adjusted for inflation, we have seen strong growth in house prices. Real house prices

Mortgage defaults and arrears

reposession-rates

Mortgage default rate statistics are produced by Council of mortgage lenders (CML). See repossession rates

Housing Benefits

housing-benefits-number

Just under 5 million receive housing benefit, at an average of £93 a week. This is a rough annual cost of £23 billion.

More on UK Housing benefit

Related

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13 Responses to UK Housing Market Stats and Graphs

  1. W at Off-Road Finance September 20, 2012 at 12:58 am #

    Those housing price to earnings ratios are unsustainable. Anything over about 4 means that buying a house will be economically crippling. 6.0 is ridiculous.

    • Invest My Way June 6, 2013 at 2:58 pm #

      We are sitting at between 7 and 8 times in Australia. It is possible but certainly stymies any decent short term growth until income catches up.

    • Peter May 14, 2014 at 2:22 pm #

      Excuse me for pointing out the obvious, but why are those ratios unsustainable if interest rates stay low?

      It’s the ratio of house-price-multiplied-by-interest-rate to earnings that determines affordability, not ratio of house price to earnings.

      If rates fall as prices rise, then the first ratio remains affordable. If earnings rise, the ratio remains affordable.

      Interest rates have been on a downward trend for 25 years and inflation has been tamed, there’s no reason for that trend to change..

      • Tejvan Pettinger May 15, 2014 at 7:25 am #

        I just don’t think interest rates will stay at 0.5%. Even if rates increased to an historical low of 3%, it would increase mortgage cost.

  2. Paul December 31, 2012 at 4:53 pm #

    The UK as a whole will consist of hotspots and areas severely hit by economic woes. I believe that UK house prices as a whole will fall again in 2013 . Average house prices of course should be taken with a pinch of salt, there is no such animal. As a visual roadmap, I see price falls rippling out from London suburbs in concentric circles, getting worse as they spread. There will be hots spots of stable economy towns and these along with very desirable properties will be somewhat protected.

    • tom February 20, 2014 at 6:40 pm #

      well paul, you were wrong. nobodey can see the future…

      • Andrew July 2, 2014 at 6:20 pm #

        No-one could have forseen the governments funding for lending scheme. That alone collapsed rates for savers, and pumped 42 billions into UK housing.

        National disgrace.

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