UK Housing Market

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


Nationwide data

  • Annual house price inflation running at 5.3% in Q1 2016
  • London showed strongest housing market with prices rising more than other areas.
  • Price of a typical home is £198,564 (Q1 2016)

UK House prices in past few decades


  • In 1969, average house prices were: £4,312
  • In 1975, average house prices were: £10,388.
  • In 1980, average house prices were: £22,676
  • In 2016, average house prices are: £198,564.

Real house prices

Real house prices are adjusted for the effects of inflation. This gives a more meaningful guide to how house prices have increased compared to typical prices in the economy.

This shows the real increase in house prices – rising faster than inflation.

Real house prices since 1975

  • In 1975, – average house prices (at 2014 prices) was £83,126.
  • In 2014 – average house prices – £188,810

126% increase in real house prices.

2. Affordability of Housing

First Time Buyers – House Price to Earnings Ratio


For UK first time buyers, the average house price is 5.1 times average earnings. In London, house prices are 9.2 times average earnings, whereas, in the north, house prices are only 3.4 times average earnings.

Affordability of Mortgage Payments


Mortgage payments as % of income reached 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)


Interest rates in the UK


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.

Further reading: UK housing affordability

4. Housing Supply

During 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.


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.

more data on housing market supply and future population trends

Housing Construction

housing construction

UK housing construction. see also UK construction

Trends in housing tenure


Source: English Housing Survey 2013-14

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 and selling off council homes. 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 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

Regional house prices


Regional trends in house price to income ratios

regional-house-prices-ratioSee more at: regional house prices

Historical House Prices

UK nominal house prices


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


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

Mortgage defaults and arrears


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

Housing Benefits


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

Renting sector


Mortgage rates


Source: B of E

Despite base interest rates of 0.5%, The standard variable rate for mortgages has crept up fro 4% towards 4.7% in 2016

Five year fixed rate mortgages (on 75% LTV) have fallen below 3%

Quantity of mortgage lending


Collapse in mortgage lending post 2007 financial crash.


By on September 8th, 2017

35 thoughts on “UK Housing Market

  1. Regional house price graph was really useful for me. Now I’m comparing house prices in the UK and the USA. Medium property in the United Kingdom is a bit more expensive than one in America. But houses in London and San Francisco, frontrunners in their countries, cost approximately equally — 521K GBP and 785K US dollars. Making a research I used date from the source

  2. i would be interested to see some of these graphs (i.e. affordability compared to income) up to 2016,

    concerned about the inevitable bubble, with people buying up second homes because ‘theres no better investment than property’ would be interesting to see if it compares with 2005-2007. may be helpful in predicting the next burst of the bubble.

    of course it could be on thursday if we leave the e.u.!

  3. Nice set: here are a few of my own that add an extra slant on some of the topics:

    Shows that the “housing shortage” is a myth.

    Shows that Council Housing has continued to transfer to Housing Associations, while BTL has been buying more than the total of new builds.

    Numbers of first time buyers have stayed subdued, and well below the 400,000 a year that the CML had projected in a study in 2006.

    Most sales are of second hand homes. Most supply of homes for net sale comes from executors and emigrants, not newbuilds.

    Real house prices back to 1952.

    Evidence that housebuilding does not cause house prices to fall – if anything, the relationship is the other way round: higher prices lead to an increase in building.

    House prices are driven by the amount that banks will lend per mortgage – note this dropped after the financial crash, and so did house prices. You can’t pay what you can’t borrow.

  4. As with a previous commenter, it would be interesting to see income levels versus rent levels and house prices, over say the last 10 years, but by city.

    Using Bristol as an example, house prices have increased and rent levels have gone up way beyond what Housing Benefit will pay. As a result, rent is unaffordable – let alone deposits, and there has been a huge increase in homelessness applications.

    However, since the number of local authority properties is declining, there are less options available. Resulting in 10,000 people on the waiting list for housing – and that’s after the city council culled 5,000 people that had ‘no chance’ of being successful in obtaining an LA property.

    People are increasingly unable to afford to live in the city in which they work, as has happened with London. However, income in London seems to be adjusted to accommodate this when elsewhere income doesn’t seem to have increased to anywhere near enough to keep up.

    Is the same thing happening in a city of a similar size such as Sheffield, Leicester or Derby. Are people being priced out of cities? Is there a difference in the economy growth rates between cities?

  5. This is a very interesting study! It will be beneficial for those who are planning to buy properties in UK. They can now compare prices and trends in different places in UK.

  6. Regional house price graph is really useful.
    It seems a average house price to average earning ratio of 5.1 times is the level at which we see prices topping out broadly speaking with the exception of london.

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