How to make sense of house prices

Are you thinking of moving home but are unsure which way house prices are going? Do you have a house to sell but wonder where to value it? House prices have lately become unpredictable, making your decisions when moving slightly more complicated. On 6th October this year, The Guardian1 claimed that house prices had increased at their fastest rate for eight months.

In the previous month2 in the same paper, the outlook was very different. The claim then was that the average UK asking price for a home fell by 1.2% to £310,000. This was the first fall recorded at this time of year since 2013.

A typical british road with houses in London, with colored doors and fireplaces on the roofs.

How to keep an eye on house prices

If you are looking to keep up to speed on house prices, the internet can provide a lot of helpful resources. The website Nethouseprices allows you to see which properties have been sold and for how much, simply by entering a postcode. Zoopla offers the same features with prices dating back to 1995, and colour-coded maps which highlight the streets where prices are the highest for the area.

Rightmove makes historic sale prices available and the site often shows original full listings with photos, floorplans and more details. This makes comparisons with other properties nearby much easier.

For those wanting to get even closer to the detail, there is a new service from the government on the Land Registry Website. The new UK House Price Index (HPI) is calculated by the Office of National Statistics and uses house sales data from HM Land Registry, Registers of Scotland, and Land and Property Services Northern Ireland. The index is published monthly, with figures for Northern Ireland updated quarterly.

The challenge when forecasting house prices

If you want to see what the experts are predicting, you could take a look at HousePriceCrash.co.uk. The website collects statistics from places such as the Land Registry, the FT and Hometrack to put together trends on house prices. They also track house price predictions from different experts to give an idea of what the future may hold.

But a word of caution on house price forecasting. It may not be wise to make decisions based solely on predictions. There are two very famous quotes about forecasting:

"Those who have knowledge, don't predict. Those who predict, don't have knowledge."
Lao Tzu, 6th Century BC Chinese Poet

"Prediction is very difficult, especially if it's about the future."
Nils Bohr, Nobel laureate in Physics

Remember, no one can tell you what's going to happen to house prices in the future although many will try.

What to do?

The value of property, just like any other asset, can go up or down. While it makes sense to be well informed, ask yourself some important questions when you are looking to buy a new house.

  • Why do I want to buy the house?

    There can be many different reasons such as needing more space, moving into a catchment area for schools, downsizing to release some money for a development, etc. If you are clear on why you want to buy, you’ll be able to plan an appropriate budget. Your budget as an investor will look very different from that of someone buying a family home.

  • Have I got a budget in place?

    Make sure you have planned for all the costs of moving, arranged your mortgage and factored in any interest rate rises. It’s important that you can afford to maintain your mortgage if interest rates go up as they are currently at record low levels.

  • How long do I want to live in the house for?

    Do you think you will be there for a long time or will you be likely to make a quick move? If you don’t expect to be there for long, will your next move be affected by a price drop? If you are planning to stay for the long term, house price movements may be less of a concern.

  • Are you expecting a change in your circumstances?

    If you are planning a family, or a change in employment, does the new house fit in with your plans?

If you are looking for more information, then the Money Saving Expert website has a house buying guide. Alternatively, you can look at our own guide on how to save for a deposit or the costs involved in buying your first home.

Saffron Building Society

Saffron provides a wide range of mortgages, however we are best known for products designed for people requiring more flexible and tailored solutions. For example, if you already own a house but raising the money for your next home is taking a long time, we have a range of products which require a smaller deposit.

We also offer discount mortgages which give you a set discount off our standard variable rate for an agreed period, meaning lower initial monthly payments as you settle into your new home. We also have options that do not have an arrangement fee which can help borrowers to reduce the costs of moving.

We take the time to get to know you, your circumstances and your needs, which means we’re able to help individuals with complex income structures such as contractors and the self-employed. We can review your particular position and discuss it with you before reaching a conclusion.

Personalised Advice

If you are looking for a mortgage, our expert advisers are available to you throughout the entire application process. Unlike many lenders, with Saffron Building Society you’ll have just one point of contact throughout, and won’t find yourself constantly talking to people in a call centre or speaking to someone unfamiliar with your details. Furthermore, a person, not a computer, makes the final decision.

Sources:

  1. The Guardian, 6 October 2017.
  2. The Guardian, 18 September 2017

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