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UK Housing Market
Average House Prices
UK Housing Supply and Demand
House Building Statistics
I have been in and around the property industry for a few years now and subsequently seen both boom and bust in the UK housing sector. What never ceases to amaze me is how the attribution of cause and causality changes as time goes by when a market transforms from boom to bust relatively quickly.
There are two main "solutions" touted for resolving the UK's house price situation:
I am not convinced that these proposals – individually or combined – can or will solve the problem. So, in a bid to get to the bottom of it I have been doing a little number crunching and colouring-in a fancy chart.
The data I will be using to demonstrate these changes over time is from the UK government – freely available to download (if you can find it – one would think such data should be reasonably easy to find – but oh no! (hat-tip to @HenryPryor for some pointers to the older data)).
All of the data used is from the same source – the only edits made were to add 2011 to the compiled 1969-2010 data. I know the numbers are not the same as those found from the myriad of sites available proffering house price indices before everyone starts comparing. The point is ALL of the numbers are from the same source. If you think the numbers are inaccurate – take it up with the government!
Whilst regular readers will know I am not a fan of average house price statistics and regard them as being as useful as a doorbell on the hatch of a submarine – this IS one of the rare occasions that such statistics can be used with a modicum of relevance over a sustained period of time. (i.e. 1969 to 2011 rather than last month to this month)
I will resist the temptation to rant in this post and simply point out a few areas of interest in the chart itself and leave you to draw your own interpretations and conclusions on what the statistics show.
(Click the chart to see the full size version)
When comparing the thick blue and red lines (average house price and total properties built) there are a few things to note:
The claim by many that building more homes will somehow bring house prices back to an affordable level doesn't quite wash – if it did, we would see direct negative correlation of prices over construction – we are starting to see this happen for 2010/11 but just one year of statistics does not prove an exception to the rule with any constant.
With respect to lending more and reducing deposit size – well, I'll say it again – if you are a government and your people are broke, lending them money is not going to help. If anything it is going to make things worse.
One last point for local authorities. The light blue line representing your house building activity is abysmal to say the least – where has all the cash gone that you had in the 70's and 80's?
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