There’s always a big appetite for the latest house prices. People’s current or prospective investments could face huge fluctuations in an often volatile market. We are all aware of the property boom that took place between the late 90s and 2007. Since then prices have remained stubbornly high, forming a real barrier to entry for first time buyers, and some reassurance for existing home owners, in the knowledge that they aren’t sitting on a vastly overpriced asset. The average house prices in 1998 were around £80,000; the average house prices in 2007 were around £220,000. This figure illustrates the crisis in the housing market.
In the last year, house prices have certainly shown some levelling off. Since the autumn of 2010 the house price index has fluctuated steadily around the +1%/-1% mark. This is the steadiest the house prices index has been for a while and therefore peace of mind for existing home owners.
One of the confusing things about gauging where the housing market is heading, is the array of figures on offer from a host of different sources. Then there are the current high level rates of inflation to take into account – currently around 5% – and the effect that has the real monetary value of the house.
The CEBR have predicted a rise in property prices of 15% over the next five years, at an average rate of 2.8% annually, but with inflation staying firm at 5% this means a real terms drop in value. The Land Registry is always fairly reliable and they state that house prices will have fallen by -3.2% by the end of the year. House sales will have also fallen by anywhere up to 6.2%. People are unwilling to sell at a lower price.
House prices are a vague science in an ever changing market, susceptible to political initiatives and many external influences, but for now, the general consensus seems to suggest stable prices in the near future.