Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
THE INFLATION MEGA-TREND QE4EVER! - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

UK Regional House Prices, Cheapest and Most Expensive Property Markets

Housing-Market / UK Housing Nov 23, 2015 - 04:01 AM GMT

By: Nadeem_Walayat

Housing-Market

Average UK house prices have now risen by 30% from the 2009 bear market low to currently stand at an average price of £204,119 (Halifax NSA Oct 2015), and are currently galloping along at an annual inflation rate of 10%. However, the UK average price masks huge regional variations in trend and momentum most notable of which is that London has literally soared into the stratosphere, up over 70% on it's bear market low and by virtue of which has pulled the average UK house price indices higher as illustrated by the below graph.


I will come back to London's housing market mania in detail in a separate article whilst in this analysis my focus will be on what is taking place in the regions which have so far lagged far beyond London's mania.

The most obvious pattern being observed is that the nearer a region is to London then the greater the house price inflation experienced. Therefore London is acting as the bull market's epicentre that is rippling out waves of capital which are mostly absorbed by the surrounding South East region then the next nearest regions, all the way to Britain's most furthest region, Scotland which was not helped by Scotland's attempted suicide that was the 2014 Independence Referendum which held Scotland's housing market back until after the election outcome.

Whilst Northern Ireland, the smallest UK region has observed the greatest volatility given its heavy reliance on central government spending so as to help prevent the locals from once again sparking civil conflict. Northern Ireland saw prices reach a bubble mania peak of £227,000 in 2007, which was followed by an equally spectacular collapse to just £90k as recently as mid 2013, the last to bottom, with the subsequent trend to £121k attempting to play catchup with the rest of the UK.

Apart from the South East, the rest of the UK's regions tend to lag behind the UK average, nevertheless some of the current deviations are at extremes when compared against the averages of the past 20 years, thus offering investor possibilities as well as warnings:

E.Ang E.Mids N.Ire N.West North Wales
Historic -1% -15% -22% -23% -25% -19%
Current 3% -17% -40% -28% -32% -25%
4% -2% -18% -4% -7% -6%
S West S. East UK Av W Midlands Yorks & Humb Scotland
Historic 11% 39% 0% -6% -27% -29%
Current 5% 47% 0% -13% -29% -33%
-5% 8% 0% -7% -2% -4%

 

South East

As expected the South East is the second most expensive UK region after London that is currently showing a +8% deviation against the long-term trend as the London bubble continues to spill over into the neighbouring towns and cities.

East Anglia

Again near to London means spill over of capital flooding in to East Anglia which is currently showing a +4% deviation against the long-term trend.

Northern Ireland

Historically NI tends to lag the UK average by -22%, the current lag is -40%, a deviation of -18% which shows that Northern Ireland is the UK's cheapest housing market. Though that does not mean a rapid bull run is imminent as government spending cuts will impact Northern Ireland harder than most regions which is thus reflected in house prices. Nevertheless the small size and volatility of Northern Irelands housing market does present an opportunity to profit from a future bubble blow off as occurred during 2007 i.e. by the time Northern Ireland peaks house prices could easily more than double from current levels.

The North, West Midlands and Wales

These three regions are all showing similar deviations from their expected trends of -6% to -7%, which is not so surprising given their relative distance from the London property bubble epicentre.

South West

The media often tends to over hype the impact of London capital pushing up South West house prices beyond the affordability of the locals. However, the South West is currently exhibiting a -5% deviation so reality is not quite match the media hype.

Scotland

The Scottish housing market has bounced back strongly following the near death experience of the Independence Referendum. And do far the oil price collapse has not done much damage to Scottish house prices which are only showing a -4% deviation against the average trend.

The Rest

The remaining regions are lagging between -2% and -4%, which should eventually play catchup against the over-extended regions. Of special note is York's and Humberside which is showing surprising relative strength by only exhibiting a -2% deviation which may in part be due to the prospects for HS2 and HS3, but definetly something positive is brewing in York's and Humber which is also one of my favourite UK locations for the emergence of a NEW mega-city (MANFIELD).

Another point to mention is to expect stronger house price inflation in the major cities than towns and villages, and of course especially the affluent areas of cities that on average will be experiencing a positive deviation to the UK average i.e. far out performing their regional averages.

The bottom line is that at this point in time Northern Ireland represents the best value for money in terms of long-term investment opportunities, whilst the South East is expensive when compared against the rest of the UK but not when compared against London which will be the focus of my next article.

UK House Prices 5 Year Forecast

It is now 23 months since excerpted analysis and the concluding 5 year trend forecast from the then forthcoming UK Housing Market ebook was published as excerpted 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:

In terms of the current state of the UK housing bull market, the Halifax average house prices (NSA) data for Oct 2015 of £204,119 is currently showing a 4.5% deviation against the forecast trend trajectory (+17%), which if it continued to persist for the term of the 5 year forecast for a 55% rise in average UK house prices by the end of 2018 would translate into an 11% reduction in the forecast outcome to approx a 44% rise.

The bottom line is that the mega-trend drivers of out of control immigration, lack of house building, flood of foreign capital, and the UK governments perpetual inflation of the debt bubble ensures that the UK housing bull market will continue despite any hits such as that which the buy to let sector is taking.

Ensure you are subscribed to my always free newsletter for ongoing in-depth analysis and concluding detailed trend forecasts that include the following planned newsletters -

  • London House Prices
  • US House Prices
  • US Dollar Trend Forecast
  • Stock Market 2016
  • Islam 3.0

Also subscribe to our Youtube channel for notification of video releases and for our new series on the 'The Illusion of Democracy and Freedom', that seeks to answer questions such as 'Did God Create the Universe?' and how to 'Attain Freedom' as well as a stream of mega long term 'Future Trend Forecasts'.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

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.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

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

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

zahlen2k
23 Nov 15, 10:39
Buy to Let

Hi Nadeem. I know you have been critical about buy to let in recent posts with the changes to the tax laws, and seems the government may be keen to free up more housing for residential purachses in the coming election (and rightly so).

What is an investor to do to profit from this trend now? Would you recommend buying in cash in one of the cheaper markets you have mentioned above? Savills have forecast a 10/15% rise in London by 2020. However London offers certain advantages in terms of liquidity, to exit a position, and also a relatively liquid rental market I would imagine compared to out of London.

On another point, what do you think of my theory. I think potentially places like Luton, and Bradford, which have seen slower rises due to the potential fears of them becoming ghettos. However, even the kids of a cab driver migrant, in these areas, would still become accountants or doctors so they would in the next 20 years become quite middle class areas. What do you think of that?

Cheers

Z


Nadeem_Walayat
24 Nov 15, 00:49
Buy to Let

I would focus on the affluent areas of major cities, less yield but greater liquidty. And invest in a market you understand i.e. know the location well.

Best

NW


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules