It’s no secret that the cost of housing has increased significantly over the past 10 years. The UK’s House Price Index has indicated several key changes in the market. In particular, the past year has seen six significant changes in price, with the most recent taking the average house price in the country to £300,000. Compared to 10 years ago, house prices have risen by a massive 50%. This has created problems for first-time buyers, as well as those looking to trade-up or sell a house fast for cash. So what exactly is the house price index and how does the UK compare to other countries?
Understanding the house price index
The house price index has been set up to identify changes within the value of residential houses throughout England and Wales. There’s also a Global Housing Watch which tracks developments within the housing market throughout the world.
The UK’s HPI tracks both mortgage and cash housing transactions. Consumers are able to view the HPI on the Gov.uk website and it’s updated frequently throughout the year.
How does the UK compare?
According to the Global House Price Index, the UK isn’t doing too bad compared to some other countries. However, it is still lagging behind the likes of Iceland, Germany and Canada. There’s actually been a recent development in Canada thanks to a new house price index launch. This recent development has provided hope to Canadians looking to keep track of changes in the housing market within their city.
Qatar, Hong Kong and Sweden have shown the biggest house price increase in recent years. So while the UK isn’t performing the worst, it could be doing a lot better compared to other countries.
Another factor that’s worth exploring is the real credit growth. This is often linked to house price changes so it gives a good idea of how the global housing market is affecting other areas of growth. As of 2015, the UK’s credit growth had reduced, while Colombia had experienced the biggest growth.
Overall however, the entire global market is experiencing a slow recovery. Affects in house prices haven’t just rocked the UK. The recession and the recovery following on from that has been experienced worldwide.
Changes in HPI can be confusing
While the House Price Index has been set up to make it easier to track changes in the real estate industry, it’s actually quite confusing. This is because new data is released from numerous sources, providing different statistics. It is thought there are at least 12 different HPI reports that use different data.
The Land Registry data is the most reliable, but it tends to be around 4-6 weeks out of date by the time you view it. Other HPI resources include Rightmove, Halifax & Nationwide, Zoopla and The Royal Institute of Chartered Surveyors. It’s worth familiarising yourself with each to determine which one provides the most accurate report.
The benefits of checking HPI
It may be confusing, but there are benefits of checking the HPI in your area. It allows you to make better housing decisions and helps you stay ahead in the property market. Being aware of local statistics such as how much homes in your area have been selling for, gives you a good indication of what to expect if you plan on selling your property.
The UK housing market has picked up a lot since the 2008 recession. However, as prices soar, it’s definitely having a negative impact on first time buyers and those looking to upgrade to a bigger home. It appears the surge of buy to let properties has made it more difficult now for first-time buyers to get on the property ladder. However, some areas are faring better than others, with Dartford, Croydon and Luton benefitting from an 18% annual increase in first time buyers.
If you are looking to sell or buy a property, keeping up with the House Price Index is a good idea. If you’re considering moving abroad then taking a look at the Global House Price Index is also going to help you decide where to relocate.
Overall if you’re worried about selling your property in the current housing market, there are some alternatives open to you. Cash buyers can help you to sell your home quickly just below market value.