UK house prices are 105 times higher than they were when the Queen was crowned in 1952, when it cost £1524 to get onto the housing ladder according to a new report by Hamptons International. The report also says that prices are 16 times higher than they were during the silver Jubilee in 1977, when it cost £9737 to buy the average house. The same report shows that London house prices are 134 times higher than in 1952 and 21 times higher than in 1977.
The prices given by Hamptons are almost the same as those found in the historical data from Nationwide's house price index. According to Nationwide the average UK house price was £1,891 in Q1 of 1952, compared to £162,722 in Q1 of this year. This is a growth of 8505% over the 60 years this is averaging growth of 141% per year.
It is easy to use that to support the argument that such growth is always going to lead to a bubble and to a crash. But investors can also use it to support their argument that UK property has proven itself as a good long term investment that continually grows over the long term despite the odd crash.
However, a chart of the Nationwide price index since 1952 shows that most of the growth has taken place since 1995, after the last crash. This would seem to indicate that we have inflated a huge bubble during this period, one which will likely take a lot more correcting than the price falls we have had so far. According to the index the average UK house cost £51,084 in Q1 1995. That means the average UK house price has grown by 218.5% since 1995.
- Tuesday 22 May 2012