Home truths about house prices

Christina Jordan looks in depth at all the recent data on house prices to get to the truth about the state of the UK property market.

There is a lot written about house prices, and it's usually avidly read. If you own a home you are interested in its value (no matter how much you protest you're not), and if you aspire to own a home you are interested in what's happening to prices.

Of course there are also plenty of Brits who are genuinely disinterested in homeownership, but they are in the minority.

Opinions are always divided on which way prices are moving and never more so than this year. We have the headline stats to chew over each month, as well as countless opinions and anecdotal evidence. But still we disagree.

Much of this is to do with the fact that average prices can only ever offer a blurred picture rather than truly reflecting what's happening in your neighbourhood, which is equally unrelated to price movements on the other side of town.

So, while it's great to look at the averages, sometimes drilling down into more specific, local figures can be more illuminating, and certainly more interesting.

The headline stats

First things first -- the headlines.

The Land Registry house price index is the official one; the big daddy of indices for those who like their data true, accurate but unfortunately slow to arrive.

The index takes its data from transactions logged with the Registry so it goes on the exact sums paid. But it's way behind the other indices because buying a property is a slow process and then it can take another month or so to register the purchase. All in all there is at least a three-month lag.

According to this index, prices rose by 1.7% from June to July, and were down 11.7% year-on-year. Average house prices are recorded as £155,885.

Nationwide and Halifax both have indices based on mortgage approvals, which normally happen three months before the sale completes, so they therefore more closely represent prices being accepted by sellers today.

• Nationwide said that prices increased 1.6% in August (the fourth month in a row). Halifax said they rose by half that amount -- 0.8%.
• Nationwide noted a year-on-year decline of just 2.7%. Halifax recorded a much larger annual drop of 10.1%.
• Nationwide pegs the average price at £160,224, Halifax at £160,973.

Rightmove is the UK's biggest property search portal and bases its index on asking prices, meaning it is the most up-to-date. Of course, asking prices may have little relation to completed sale prices, but for the record it said prices rose 0.6% in September, a year-on-year decrease of just 1.5%.

Here's a table to put it all in context:

But the average statistics still only ever tell us the averages, and indicate trends which, interesting as they may be, can be trumped by more local statistics which provide a clearer picture.

Riveting rural facts

Halifax's rural house price index released this month for example was a real treat (if you're a house price geek like me).

It said houses in rural areas have not fallen as far as urban properties over the past year and that the average rural house price is now £203,535, over 20% higher than its urban equivalent.

Rural affordability has improved as prices have dropped, but house prices are still on average 6.2 times average earnings, compared to just 5.2 times average earnings in urban areas.

Ever wondered which rural local authority has the highest house prices?

Well, since you ask, it's South Oxfordshire (according to Halifax), with average house prices of £307,518 -- over double the average prices in the cheapest rural local authority, North Lincolnshire, where average house prices are a mere £122,052.

Outside the South the most expensive is Craven in North Yorkshire where prices average £253,141 - that's a quarter of a million! In Yorkshire!

But enough about rural Britain -- after all over three-quarters of us of us don't live in the country.

Deeper and down

Starting with the regions -- all regions in England and Wales experienced a decrease in average property values over the last 12 months, says the Land Registry. But the North East saw the biggest drop with prices falling 13.2%, and Wales the smallest fall at just 8.3%.

In fact, prices in Wales rose by a massive 3.1% from June to July this year -- a huge increase (in Conwy alone they shot up 3.7%).

Drilling down to county level it was also a Welsh county, Ceredigion, that experienced the smallest annual price fall in July, with a drop of just 8.4% over the year. Luton was at the other end of the scale, with average property prices dropping a whopping 22.5%.

Going even further down into the figures, the metropolitan district to see the biggest annual fall in fall prices to July was Manchester, at a massive 19.2%. I bought my first house here in July so let's hope they bottomed out there and then!

Lucky homeowners in Walsall saw prices drop by an average of just 10.7% -- the smallest urban drop of the lot.

Not forgetting the capital, the London borough with the smallest annual price fall is the City of Westminster, with a drop of just 9.2%. Homeowners in Barking and Dagenham however experienced the greatest annual decrease in London, falling 20% - ouch!

Prices by type

It's not just where you live that takes you away from the average price statistics -- it's what you live in.

Detached houses have dropped by less than other types for example -- which is probably not surprising -- while terraced homes have fallen furthest, as the table below shows.

Since Britain is such a diverse old place it is nigh on impossible to come to complete agreement about which way house prices will move - if only because it's hard enough to find consensus about where they are now!

Yet the headline stats will never lose their appeal. I for one am eagerly awaiting the Land Registry figures on Monday, what Nationwide says on Tuesday and Halifax's index the following week.

But never mind the indices - what do you think? Tell us your predictions for house prices this year using the comments box below.

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