UK House Prices Soar to New All Time High, London Bubble, Nationwide Data
Housing-Market / UK Housing Jul 02, 2014 - 02:32 PM GMTBy: Nadeem_Walayat
The Nationwide released their latest UK house price data for June 2014 that showed a 1% rise on the month lifting the annual rate to 11.8% and taking average UK house prices to a new all time high of £188,903. All UK regions saw a rise in house prices with the South East continuing to outperform and London's bubble market hitting an raging hout annual price rise of 26%.
The Nationwide's chief economist, Robert Gardner, commented:
“House prices recorded their fourteenth successive monthly increase in June, rising by 1%. As a result, the annual pace of price growth picked up to 11.8% from 11.1% the previous month.
“In seasonally adjusted terms house prices reached their 2007 peak in Q2, just as UK economic output is likely to have surpassed the high water mark reached before the financial crisis.
“While all regions recorded annual price gains for the fourth quarter in a row, there is still significant variation across the UK, with the South of England continuing to record the strongest rates of growth. In particular, London continued to outperform, with prices up by almost 26% in Q2 compared to the same period of 2013.
“The price of a typical property in London reached the £400,000 mark for the first time, with prices in the capital now around 30% above their 2007 highs and more than twice the level prevailing in the rest of the UK when London is excluded. In the UK as a whole, prices are less than 1% above their pre-crisis peak. Excluding London they are 0.4% below peak.
“The annual pace of growth in the capital will probably start to slow in the quarters ahead, given the high base for comparison from Q3 2013 onwards and given anecdotal evidence from surveyors and estate agents that activity may be starting to moderate.
London House Prices Bubble
The London house pries bubble continues to inflate at the rate of 26% per annum.
Robert Gardener comments:
“The price of a typical UK house rose by 2.9% in Q2, after allowing for seasonal effects. Prices were up 11.5% compared with the same quarter of 2013.
“Annual house price growth accelerated to 26% in London, far outpacing the rest of country, and the highest growth rate since Q3 1987. Prices in the capital are now 30% above their 2007 peak, with the price of a typical London property now in excess of £400,000.
“Scotland saw the weakest growth, with prices up 5.4% year-on-year in Q2. Northern Ireland saw an 8.4% rise in prices, although they remain around half the level they were at their peak. Annual price growth in Wales picked up to 9.3%, from 5.2% last quarter.
“Amongst the English regions, the South continued to outperform the North. Outside of London, the Outer Metropolitan area was again the strongest performing region, with annual price growth of 16.4%, whilst Yorkshire & Humberside was the weakest English region, with prices up 7.0% over the year. Prices in the Southern regions are now above their 2007 peak, whilst those in the North remain below.”
Meanwhile the more widely followed Halifax house prices index continues to trend towards breaking to its new all time high before the end of this year.
UK House Prices Five Year Forecast
The most recent house prices data out of the Halifax is inline with expectations for a forecast 55% rise by the end of 2018 as illustrated below -
UK House Prices Forecast 2014 to 2018 - Conclusion
This forecast is based on the non seasonally adjusted Halifax House prices index that I have been tracking for over 25 years. The current house prices index for November 2013 is 174,671, with the starting point for the house prices forecast being my interim forecast as of July 2013 and its existing trend forecast into Mid 2014 of 187,000. Therefore this house prices forecast seeks to extend the existing forecast from Mid 2014 into the end of 2018 i.e. for 5 full years forward.
My concluding UK house prices forecast is for the Halifax NSA house prices index to target a trend to an average price of £270,600 by the end of 2018 which represents a 55% price rise on the most recent Halifax house prices data £174,671, that will make the the great bear market of 2008-2009 appear as a mere blip on the charts as the following forecast trend trajectory chart illustrates:
Current State of the UK House Prices Forecast
The updated graph reflects the latest Halifax house prices data (NSA) released for May 2014 at £185,747 which is set against the forecast index level for May 2014 of £185,544 which illustrates that house prices over the past 6 months have shown little deviation from the forecast trend and therefore the long-term trend forecast remains on track to achieve a 55% increase by the end of 2018.
As house prices momentum is accelerating this suggests that UK house prices could trend slightly above the forecast trend trajectory over the summer months which would match the Nationwide's acceleration to 11.8%.
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By Nadeem Walayat
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Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
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