UK House Prices: No real growth for 20 years!

House prices are a national obsession and they make up about half of UK wealth. But what if I were to tell you that house prices are where they were 20 years ago? In this video, I will show you why this statement is true. I will also discuss where we are now with house prices both overall and by region and give you my view of where house prices might be headed in the future.

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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.

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[dallassukerkin]

As someone who bought their house in 2006 I am disappointed to see this! So this is why we should not treat our houses as investments!

[MrDuncl]

The main problem is they don't measure inflation correctly. People get all upset when the price of a can of beans goes up 30p but celebrate when their house goes up £30K in a year. As the most expensive thing most people buy houses should make up a big chunk of the inflation basket.

Looking back twenty years includes the big drop around 2008. To put things in perspective I made next to nothing on the house I bought in 1989 and sold in 1999 and that was in actual £s.

[fredatlas]

I got a 3% pay increase in 2022 and 5% in 2023. RPI inflation was 8% in April 2022 and 13% in April 2023. Plus since 2009 my yearly pay increases have been mostly 1% and a bit later on 1.5%. The biggest pay increase I had from 2009 up until 2021 was just 2%. The standard used many yrs ago by mortgage lenders was 3x your gross annual salary for a single lender. Under that rule the maximum mortgage i could get now would be just £69000, i don't think that would even buy me a small studio flatb

[Reasons-to-be-Vegan]

Comparing a house today with a house 20 years ago I comparing Apple's and pears.
Consider that the typical house will have had several high cost upgrades. Insulation, heating systems, kitchen and bathroom modernisation, double glazing, extensions, garden structures, garages, double glazing, loft conversions, solar panels, batteries, EV chargers, porches .... so if the average net real return is 1.1% then house holders have made a massive loss.

[tomp]

Excellent video as usual. I think what this misses is the role of debt though. Depreciation of debt is a powerful weapon.

[informer-]

You know we in a boom cycle when someone shilling me a recliner

[BAmalakas]

Unless you are buying in cash the price of the house really includes the interest you pay over the course of the mortgage, and the average pay is presumably before taxation which changes over time...

[lindadonald]

If it is your main home, price is nice but not a big deal if you have to pay more for your next house, until old ate and used for nursing home. If buy to let, plan to ensure you never sell and rental yield is focus, again house prices are nice but doesn’t matter if dont sell. If you are buying for price appreciation, well the risk return in the gain is up to you. In short, live in your home and dont remortgage, and keep buy to lets forever and leave in will.

[emcdt]

Glad to see someone applying some analytical pragmatism to UK house prices. As other commenters have said, they seem to be a national obsession

[davidgray]

Loved the chair add, keep the jokes coming, good to see you have a sense of humour!

[dugowf]

I’d mention a few things though. Firstly there is a disparity between the rate of inflation vs wage inflation. This means house prices are rising against wage caps. Secondly, as an investment, property also includes a “dividend”, ie rent. And rental inflation is massive

[CristianSzwarc]

what may not be taken into account when saying "No real growth for 20 years" is the dividends the house payed during that period, either by allowing you to live in or by renting it to others

[donnicholson]

Growth is what's killing this world. House prices SHOULD be stable compared to wages.

[Rol-fymy]

Like the calm rational explanation of his view wether I agree or disagree, so refreshing to have videos without combatitive tone hysteria or dramatic background music/noise . Feels like a world I want to be in.

[CloningIsTooGoodForSheep]

Falls in house prices are factored into the inflation calculation so if house prices rise inflation will also appear to rise. The drop in house prices has allowed real inflation for the average person to be underestimated such that wages won't have kept up with costs. That is one of the reasons why people feel poorer when the graphs say they should be feeling better off on average.

[TonySantolaria]

Excellent analysis Ramin. Prices should get a boost from falling interest prices but the price to wage ratio is already so high, that I cant see prices rising strongly again

[nunuknowstheway]

It’s a tricky market right now we just bought a house and had to pay close to asking price to get it. The market might be soft but sellers don’t have to sell as in our case the seller still had a low rate mortgage so they weren’t particularly in a rush to sell. We had to outbid 3 other couples and despite there being more houses on the market many are unsuitable so the main interest is concentrated in a handfull of good properties that have been looked after well. We were shocked how many of the houses we viewed were listed for £1M+ and despite being large brick and mortar desirable houses in desirable locations many of the current occupants (elderly couples) were living in absolute poverty! We are talking interiors not updated for 20-30 years, damp, rotten floors and windows mould everywhere. I wonder how many UK home owners are chuffed with their house returns whilst living in these horrible conditions trying to protect their “investment”.

[TheKnexMaker]

the graph you were showing around 5:30 mark is very intresting. I think this up and down nature over the last 15+ years is a lot to do with the max that people can afford. bank lend money based on income and loan leangth so unless mortgages get longer and longer or incomes grow higher and higher I dont think we have much more room for growth in house prices. it looks like they are trying to go up but then hitting a wall of limitation.

I personaly started thinking about buying back when I got my first real job as a painter and decorator on a full time 40 hour contract back in 2022. my almost £30k slary when I went to 3 different banks for mortgage quotes they were between £90k-£120k so obviusly if the avg price is between £250k-£280k I cant get anywhere. at least if they were under £200k you might have been able to find a run down place and then bargin a lower price if demand wanst too high. but thats not the case.
affordability keeps bringing the prices down but avalibility keeps shooting them back up.
its a death loop at this point. and I fear that by the time my girlfreind gets back into work after being long term sick that even both of up on 30-35k wont even be able to afford somwhere live.

[TMZ-jr]

house prices are now valued on the joint incomes of a couple, no longer a single wage earning household of the 1970s. They are also becoming based upon the highest wage earners e.g London given limited housing supply. The top 40 highest wage earnings set the price, the price to earnings for them is reasonable. Multiples aren’t going to reduce without very substantial over supply of housing.

[luxushauseragency]

Great video! How do you see the BoE benefiting from the introduction of CBDC? Please summarise the pros/cons and impact on controlling inflation.