Are house prices really booming and what's my home worth? What's actually happening in the property market...
By Money Mail
When Margaret Thatcher decided in the Eighties to sell council houses to their tenants, she tapped into a yearning in the British psyche.
As a nation we have a deep desire to own our own homes, and have come to see housing not just as roofs over our heads but as a reliable and tangible investment. The statistics are mind-boggling.
All British housing combined is worth £5.2trillion. There are about 25 million homes in the UK, and around seven in ten of these are occupied by the owners. Go back a century to 1918, and just two in ten people owned their own home.
In some towns prices fell over the past year, but some London boroughs experienced phenomenal rises
WHAT’S HAPPENING TO HOUSE PRICES TODAY?
We all think the housing market is booming and prices are rising — but is this really the case? Actually it all depends on where you live and what type of house you have.
House prices can be affected by all sorts of things including supply and demand, interest rates, wage growth, immigration and even expectations of price rises.
Land Registry figures show that the average price in the UK hit £168,356 in January, up by 4.2 per cent in a year. Detached houses were rising fastest at 4.6 per cent to an average £267,590 while terraces had risen least, by 3.6 per cent to £125,901.
The value of homes in London rose by 2.1 per cent just in the month of January and by 10.9 per cent over the whole year to an average £409,881. Meanwhile, in Yorkshire and Humberside, prices fell in January by 1.4 per cent and were up a mere 0.3 per cent in a year to an average £114,910.
In some towns such as Sunderland, Doncaster and Rochdale, prices actually fell over the past year. Yet some London boroughs experienced phenomenal rises. Hackney homes soared by 20.4 per cent, Waltham Forest by 18.3 per cent, and Lambeth by 16.4 per cent.
... AND OVER THE LONGER TERM
Halifax has the longest running survey, going back more than 30 years. Its figures show that someone who bought an average-priced house at just under £31,621 at the end of 1983 would — by the end of last year — have been sitting on a property worth almost £173,685.
That’s equivalent to making 5.84 per cent a year tax-free, if it’s your main home. Once again homes in London and the South-East have risen in value much faster than those in the North.
Average annual price growth in Greater London has been just under 7 per cent over the past 30 years, while in the North it has averaged 5.35 per cent. This might not sound like a lot, but over the past 30 years this has widened the price gap between the average home in the North and one in Greater London from just over £15,000 to almost £187,000.
CAN I BELIEVE THESE SURVEYS?
House prices surveys seem to be ten a penny. And they sometimes seem to be saying different things. So can you believe them? Well they are all accurate in their own way. It’s just that they’re measuring different things.
Land Registry prices are based on the actual price paid for a home. Its database has details of more than 18 million sales made since January 1995. It works out the rise by comparing like-for-like sales when the same house is sold for a second or subsequent time.
Halifax and Nationwide use their own mortgage data. So the price is the one at the time the mortgage is approved. This excludes homes that are sold without mortgages or financed by other lenders.
Rightmove shows the asking prices of homes on the market — so it may reflect owners’ or estate agents’ optimism. However, it is based on a sample of up to 200,000 properties a month.
WHAT’S MY HOME WORTH?
When house prices are rising, as they are now, this is the question we all secretly want answered. The only way to know for sure is to put your home on the market and sell it! You could also get a couple of estate agents to do free valuations. But there are also very useful tools on the internet.
The best known is Zoopla, part owned by the Daily Mail group, which stores details of houses that have been sold or are for sale.Just type in your street or postcode and the details will pop up on your screen.
Even if you don’t want to know what your own home is worth, it’s a great way to snoop on your neighbours. The other alternative is to go to the website of a lender such as Nationwide where they have calculators that will estimate the value based on what you paid and where you live.
HOW DOES THE FUTURE LOOK?
If ever there was a green light to buyers it was comments by Bank of England governor Mark Carney that interest rates won’t rise for a year and even then will rise only slowly. Rarely can there have been an opportunity to buy a home with advance warning that your mortgage rate won’t rise substantially for several years.
Estate agent Savills, which is the bravest forecaster gazing five years into the future, suggests prices will continue to rise steadily — and by more than consumer price inflation. Savills is predicting that for prime property, ‘super suburbs’ will outperform London over the next five years. These places include Surrey suburbs such as Oxshott, Esher, Cobham, Weybridge and Virginia Water, Ashridge in Hertfordshire and Gerrards Cross in South Buckinghamshire.
For mainstream property, London is again expected to lead the way this year with an 8.5 per cent rise, Savills says. But it suggests prices elsewhere should go up by at least 4.5 per cent.
The best rises over the next five years are expected to be in the South-East, South-West and East of England, with prices up by around 30 per cent by the end of 2018. The slowest could be the North-East, North-West and Scotland at less than 20 per cent.