Did your house make more than you last month?

The England and Wales Land Registry has a great online tool for looking at house prices. I looked at prices by region from Jan 2000 to current. While house prices hit a peak in 2008 in every region and then fell, those in the South have now overtaken that 2008 peak, while those in the North haven't. In the most Northerly regions house prices are flat for the past five years!! The dividing line between North and South is from the Severn to the Wash. The most Northerly regions are above a line from the Mersey to the Humber. Sales are only 2/3 of the levels pre 2008 in the South and circa 1/2 in the North. You get a better understanding of what is happening by looking at the longer term and giving less weight to the short term noise. I live in London and my property has increased in a value a lot. It really only means that I can live in a decent care home at the end of my life for longer than would otherwise be the case before the dosh runs out. Day to day it makes absolutely no difference to me at all.

We've seen these massive increases before. We bought our first house in 1972 for £10,500 and sold it 2 years later for £20,000. I was earning £1,200 a year. The difference then was that the interest rates were much higher than now and we had rampant inflation. We only managed the mortgage repayments by taking in lodgers. In those days people were prepared to share bedrooms - they won't these days! It wasn't all 'the good old days'. The wait for a telephone line was 18 months.Times have changed.

Supply of housing is inelastic, and at any one point in time is fixed. Supplying more housing takes a long time and is constrained by other supply issues, like land, planning permission, materials and labour. There is also the supply of existing property into the market, but as people live longer this aspect is actually reducing. There is increased demand for housing from increased life expectancy, people wanting to live by themselves rather than with others (e.g. leaving home or divorce) and net inward immigration. If housing supply doesn't keep pace then in the long term prices will rise. Short term other factors like mortgage availability and consumer confidence may have an impact but the longer term trend will be for prices to rise. Therefore we need to build more homes. This will provide work here, tax revenues here, lower house prices and better housing accommodation for families. Win Win situation. As it is with new housing supply not keeping up with demand, the existing housing stock becomes more crowded (this is what is actually happening although the demand is for less crowded accommodation). People have to live somewhere, hence existing homes are occupied more densely. Those in their own homes aren't immune - think of the adult children who can't afford to move out! We need to build more - but so many people refuse to face the facts - including our politicians, of all parties because they fear the NIMBY backlash from the property asset rich.