Average house prices in the UK have increased by just 20.2% since they peaked in September 2007, but some areas may face a fall according to a study by a leading property management firm. DJ Alexander, one of the UK’s largest family run property management companies, has analysed data over the last 20 years and found that while average house price growth from June 1998 to September 2007 was 172.4% it has only risen by 20.2% in the eleven years to June 2018. Despite this there are enormous variations in the range of increases over this period with one region of England even recording a decline in average property prices.
Across the countries of the UK the greatest increase recorded was in England which saw average property prices rise by 25.8% between September 2007 to June 2018 with Scotland next at 5.7% and Wales at 5.2%. Within the English regions there were considerable differences in increases with London the highest rising by 59.8% since September 2007; Eastern England increasing by 39.9%; and the South-East by 36.4%. Yorkshire and Humber average property prices have risen by 7.6% over the same period; by 5.4% in the North-West and have fallen 7.9% in the North East.
David Alexander, managing director of DJ Alexander Ltd, explained: “I think that most people would be surprised to find that the average house price has risen by just 20.2% since September 2007. This scale of rise over more than a decade is quite modest but of course the reason is that average house prices did not recover from the September 2007 peak until August 2014 and in some areas, such as the North East, they have still to return to those earlier prices.”
“Given the time it took to climb back from the 2007 price fall it is interesting to note that many areas of the UK have not experienced large price increases and there is less fervour and frothiness to the marketplace compared to the early noughties. However, this is not the case across the whole of the UK and some areas clearly look a bit top heavy with prices having increased substantially once more.”
David continued: “London and the South East have clearly slowed over the last couple of years having peaked in July 2017 at £488,574. Indeed, the average price for June 2018 is only £1,222 higher than the July 2016 figure so there are clear signs of the market flattening. I would expect this to continue for some time to come, perhaps even a few years as prices correct and become more in line with the marketplace and with reality. For the rest of the UK outside this bubble there are pockets of substantial growth – Edinburgh and Manchester come to mind – which are experiencing considerable increases in price, but this is due, at least in part, to increases in population driving demand.”
“For the rest of the UK steady growth in property prices is a good thing. I am always most suspicious of dramatic price increases over short periods as they almost always signal dramatic price falls over and equally short time. Property purchase, whether as a home or as an investment, should always be a long-term prospect. It is not a get rich quick investment and is all the better for that.”
David concluded: “The enormous growth in average property prices between June 1998 and September 2007 – which was as high as 218.7% in the South West to 180.3% in the South East – was not a healthy period for the property market as it created a view that property could never fail. The seven-year period before prices recovered from the 2007 fall is an indication of just how out of kilter these prices were with the marketplace. While I think some areas are now facing a correction in prices I don’t think we are facing the same situation as 2007 but buyers and investors need to be aware of the wide variations in prices across the UK and tailor their spending accordingly. You wouldn’t invest in a share that was at its all-time peak so equally I would caution against buying property that was at its highest ever level.”
Leave a Comment