The Future of UK House Prices

In this video, I’ll explore the outlook for UK house prices over the next twelve months and beyond. I look at key insights from various forecasts and examine the factors influencing the market.

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Timestamps
00:00 Introduction
00:23 Drivers
05:29 Forecasts
12:41 What To Watch

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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.

[tibbsazoid]

Great vid as always. You touched on this a little bit, but I really think we need to stop labelling house price inflation as "positive". It's the single biggest problem in our society, and in the majority of cases we're only getting richer in a very shallow and shortsighted interpretation of paper wealth. Property is a money black-hole. We're living as slaves to our mortgages, a house is an unproductive asset, and house price inflation is likely to be the main reason we have a low birth rate. You can't leave your house to your kids if you could never afford to have kids, and if they have to wait for you to die at 90 before they can get on the housing ladder, it's hardly beneficial.

[kalex]

If real average house prices have not increased since 2004, then why people believe house prices are expensive?? Could it be that average real wages have gone down compared to 2004 and the general cost of living has increased that make house prices appear expensive?

[scottinjapan]

It's interesting how HOUSE PRICE INFLATION is or was seen as great, but general inflation is seen as terrible. How much would a McDonald, or a cup of coffee be if general inflation followed the same as HOUSE PRICE inflation? One house sells for 175, 000 then a month later a similar house in the same street goes up another 10, 000. I think the estate agents also play a part in this. Nobody's salary has jumped 10, 000 in one month. Affordable houses imho are a myth. It's some kind of scam of part ownership. But it all seems fake, if I make money on selling my house, it only means everyone else's has increased by the equivalent amount. So it is only noticeable when I
downgrade or they sell it when I enter a nursing home. Finally, as you said, the UK government will Artificially pump up prices further. Homes seem to be for profit, and not families.

[stopthatluca]

Actual sold prices from UK Land Registry: for Plymouth and West Devon, average house prices have fallen 17% since the peak in 2022. The data is always about 6 months out of date. I'm told by local Estatge Agents that buyers have disappeared and some are planning another round of reductions in September.

[odmdfyc]

Ramin, can you ever compare the forecasters success by looking at previous forecasts and their accuracy. There is a lot of forecasting but who has been the most accurate ?

[Mouldhead]

The main problem with the model is that the biggest driving variable by correlation is not wages but availability of credit. Then price of credit. THEN wages.

[SpaceCoyote]

why do you class a house price increase as optimistic? unless you are invested in property, higher house prices don't matter to people who already own a house. As a first time buyer I class house price decrease as optimistic.

[talexe]

I know it’s probably the industry-standard terminology, but I wince at house price increases being described as the “optimistic” scenario (even as a homeowner).

Not that a crash would be good either.

[TheLiverpoolDelta]

I live in a White Flight area in the North West, most of our house price growth is fuelled by Londoners moving up north to get away from knife gangs. Each home viewing still gets 30+ prospective buyers... and this is supposed to be to be a flat period? I can't imagine what it will be like in 2027.

[johnw]

As long as the UK has sky high immigration, house prices will be pushed up by landlords knowing demand will go up while salaries are suppressed by salary competition, so house prices are never going to get better for salaried workers.

[jabberwockytdi]

Building a lot of affordable houses doesn't cause price drops across the board, that depresses the number of medium to large houses being built so the cost to move from a 1-2 bed young couples house say to a 3-4 bed family home can remain high.

[davidhaylett]

There are also social changes having an affect as men no longer wish to marry western women or have kids with them. The marriage rate is very low and deaths exceed births for the first time. More than 50% of women aged up to 30 are single, unmarried, and childless.
So people now face having to buy alone and not with a partner as long term relationships have collapsed too. In theory this creates demand for more houses, but in practice individuals often cannot afford to buy and have to rent. Often not having enough income to rent a whole property or even a room in a property.
It’s hard to see how prices rise until the interest rate drops to 3% and a five year fix to below 3%, which is probably the end of 2025. The house building is not going to happen as we just don’t have enough skilled workers, unless more are imported and put more pressure on housing.

[tancreddehauteville]

My belief is that house prices will either stabilise or fall in parts of the country where prices are currently very high, i.e. London and the South-East. In other parts of the country, such as the Midlands or the North-West, prices will continue to rise. Affordability is an issue, but it should be remembered that the trickle down effect from large inheritances is helping many middle class families to provide large deposits to young people within these families who wish to buy a home. This is what has so far prevented a house price crash in the wealthy south-east.

[fortune-cookie-monster]

There are many baked in economic drivers that push house prices up, including government policy, banks, investors and vested interests in house selling e.g. estate agents. However, the idea that house prices always go up is a fallacy. Ultimately, prices are driven by affordability and if you look a little further forward into the future, say 10 years, then we have millions of millennials and gen z who are priced out of housing even at today's prices. And one thing is for sure, these millions of people will definitely find housing. So house prices have a huge medium term problem.

The answer isn't just to build more houses because this doesn't affect affordability. The obvious outcome is that one of two things will happen; either house prices will come down significantly or they must remain largely unchanged and wages need to increase significantly. Governments, banks and vested interests will all wish to see the latter, however it is no easy feat to achieve.

[sjokankbh]

Hi Ramin, nice video. A suggestion for an additional video: It would be interesting to have you look at the historical performance of those projections by others: you show a long time-series of projected increase/decrease in house prices - what did the prices actually do? How good are these projections? I´m guessing not great but maybe I´m wrong. A similar exercise could be done for stock-market projections etc

[johnristheanswer]

Ramin, just to be picky - buyers are not "borrowing" 6 or even 10 x income. The house prices maybe 10x income but the average mortgage max is 5x income. Good video.

[nsoul]

UK houses are overvalued and offer poor value for money. This comes from a home owner.

[stevie]

I disagree that house prince to income ratios should mean revert IF you look at individual incomes, as increasingly householdsa are dual-income.

Unless you're already using household income, rather than individual?

[rickyclarke]

I like your videos it's so refreshing to have a balanced and well supported view in sea of click bait and doom and gloom type videos on you tube

[takok]

Logic would dictate you are correct. However inflation has been higher than wage rise, the GPD is manipulated, the high demand boost prices up especially when stock available is low. First time buyers are often pushed to purchase new build, and generally new builds are 10% more expensive than older house and with smaller space. Non of these give a good starting projection for new buyers. House prices up in areas with better schools. The average person has very little savings. Urban areas are majorly forgotten by governments. Still, the prices will keep going up. You have plenty of corporate buyers pushing prices up. There is a reason why over the years, the yearly salary multiple for a mortgage, has increased, and will continue to increase.