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UK House Asking Prices Break Above £300k! Housing Market Paralysis

Housing-Market / UK Housing Mar 23, 2016 - 05:47 AM GMT

By: Nadeem_Walayat


Apparently according Rightmove average UK house asking prices (for England & Wales) have now breached the £300k price level for the first time ever, currently standing at £303,190 against Februarys 299,287. And for comparison the previous bull market peak was £236k, whilst asking prices bottomed out in 2009 at £215k and where most of the surge higher has come during the past 3 years, a rise of 24%.

Furthermore rightmove states: "Momentum spreads north and west with six out of ten regions setting record price highs this month"

This is inline with my conclusions of 4 months ago as illustrated by the following 2 pieces of analysis on regional and London house prices.

UK Regional House Prices Analysis

Drivers of London House Prices for the next 3 years and beyond:

Though of course rightmove is commenting on ASKING prices, which is not the same as what houses actually SELL for. The most recent Halifax average house prices (NSA) data for February 2016 is £206,320 which is a far cry from Rightmove's headlines grabbing £303k that stands at an over £90k difference between average house prices and asking prices. In fact the gap between asking prices and sold prices is now at its highest ever this century! Which is indicative of a housing market in a state pf paralysis as a consequence of the lack of supply vs huge demand pressure given the huge gap between what buyers are willing to pay / can afford, and what home owners fantasise about their homes being worth.

And there is no sign to the end of this paralysis because the Bank of England imposed rules in 2014 to reduce the risks of another mortgage lending led banking sector collapse so as to prevent future Northern Rocks or RBS, or Halifax, well virtually where every bank stood in 2008. Which means the amount lenders can lend over 4.5X earnings is limited to 15% which means as house prices rise the Banks are forced to reduce the number of high multiple loans they are able to offer so as to stick to the 15% limit.

In terms of the prospects for UK house prices, it is now over 2 years and 2 months since excerpted analysis and the concluding 5 year trend forecast from the then forthcoming UK Housing Market ebook was published:

30 Dec 2013 - UK House Prices Forecast 2014 to 2018, The Debt Fuelled Election Boom

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:

UK average house prices (£206,320) are currently showing a 5% deviation against the forecast trend trajectory, which if it continued to persist then in terms of the long-term trend forecast for a 55% rise in average UK house prices by the end of 2018 would translate into a 13% reduction in the forecast outcome to approx a 42% rise by the end of 2018.

Ensure you are subscribed to my always free newsletter (only requirement is an email address) for the following forthcoming analysis :

  • US Interest Rates and Economy
  • US Dollar Trend Forecast
  • UK Housing Market Trend Forecast
  • Stock Market Trend Forecast
  • US House Prices Detailed Trend Forecast
  • Gold and Silver Price Forecast

By Nadeem Walayat

Copyright © 2005-2016 (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.

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

© 2005-2016 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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