House prices correlated to inflation?

Michelle-Matched-Bettor

I want to create a graph of house prices, and overlay inflation to compare the two.

Where can I get the data to do this?

Thanks

Rinoa

Michelle-Matched-Bettor wrote: »

I want to create a graph of house prices, and overlay inflation to compare the two.

Where can I get the data to do this?

Thanks

Don't forget to take account of the effect inflation has on the outstanding mortgage balance.

HAMISH_MCTAVISH

Michelle-Matched-Bettor wrote: »

I want to create a graph of house prices, and overlay inflation to compare the two.

Where can I get the data to do this?

Thanks

Nationwide historical house price series has data going back to the early 1950's, and can be downloaded in Excel format here.....

http://www.nationwide.co.uk/hpi/historical.htm

Historical inflation figures based on the UK RPI measure, along with pre-RPI estimates of inflation back to 1750, can be found here........

http://safalra.com/other/historical-uk-inflation-price-conversion/

Current and historical RPI data back to 1948 can be found here......

http://www.statistics.gov.uk/statbase/tsdataset.asp?vlnk=229


Or you could save yourself the trouble and just look at the Nationwide inflation adjusted house price index, also available here.....

http://www.nationwide.co.uk/hpi/historical.htm

The long term average is inflation plus 2.8% per year.

Thrugelmir

HAMISH_MCTAVISH wrote: »

The long term average is inflation plus 2.8% per year.

Shouldn't the "is" be a "was" ?

HAMISH_MCTAVISH

Thrugelmir wrote: »

Shouldn't the "is" be a "was" ?

Nope. The long term average is still there or thereabouts.

Michelle-Matched-Bettor

HAMISH_MCTAVISH wrote: »

Or you could save yourself the trouble and just look at the Nationwide inflation adjusted house price index, also available here.....

http://www.nationwide.co.uk/hpi/historical.htm

The long term average is inflation plus 2.8% per year.

@ Hamish - thanks. That's basically the information I was looking for. So it's a fact that (long term anyway) house prices have outperformed inflation? i.e. they have risen over and above the average cost of consumer goods services. To illustrate it simply, is it correct to say if I didn't spend all my money in Tesco 50 years ago, an decided instead to buy a house, and I sold that house today and went into Tesco, I would have more money to spend?

Rinoa wrote: »

Don't forget to take account of the effect inflation has on the outstanding mortgage balance.

@ Rinoa - Am I correct in assuming you are referring to the fact that inflation errodes debt?

Generali

Michelle-Matched-Bettor wrote: »

@ Hamish - thanks. That's basically the information I was looking for. So it's a fact that (long term anyway) house prices have outperformed inflation? i.e. they have risen over and above the average cost of consumer goods services. To illustrate it simply, is it correct to say if I didn't spend all my money in Tesco 50 years ago, an decided instead to buy a house, and I sold that house today and went into Tesco, I would have more money to spend?

Put simply, yes.

You're missing a part if you want to look at the investment potential which is the 'cost of carry', ie the ownership costs of buying a house, eg mortgage, rates (later the council tax), maintenance and upgrading to keep in line with what the market expects. Also there is rent, either actual or imputed*, on the benefit side.







*Imputed rent is the amount of rent that you save by owning a house.

Michelle-Matched-Bettor

Generali wrote: »

Put simply, yes.

You're missing a part if you want to look at the investment potential which is the 'cost of carry', ie the ownership costs of buying a house, eg mortgage, rates (later the council tax), maintenance and upgrading to keep in line with what the market expects. Also there is rent, either actual or imputed*, on the benefit side.

Yes - I realise my example is simplistic - but I was getting down to bare bones. I do realise of course, that if you are going to invest in a property, it needs to be a "good buy" (perhaps a bargain, good area.... etc etc)

geneer

Rinoa wrote: »

Don't forget to take account of the effect inflation has on the outstanding mortgage balance.

Don't forget that inflation also has an effect on the value of a house you might end up thinking about buying too.

geneer

Michelle-Matched-Bettor wrote: »

I want to create a graph of house prices, and overlay inflation to compare the two.

Where can I get the data to do this?

Thanks

HPC graph.

http://www.housepricecrash.co.uk/graphs-index.php

They already have inflation adjusted house prices too, but only Nationwide.

geneer

Michelle-Matched-Bettor wrote: »

@ Hamish - thanks. That's basically the information I was looking for. So it's a fact that (long term anyway) house prices have outperformed inflation? i.e. they have risen over and above the average cost of consumer goods services. To illustrate it simply, is it correct to say if I didn't spend all my money in Tesco 50 years ago, an decided instead to buy a house, and I sold that house today and went into Tesco, I would have more money to spend?

"house prices only go up long term" was a familiar phrase in 2008 when they were tanking of course.

Theres a school of though (or self justification) that thinks provided your able to service a debt everything is just fine.

This does neglect the simple reality that had you say picked up an asses for 20% less, the mortgage sum would be less, the deposit requirements would be less, and the total interest payments would be less.

The first and last items are quite important combined.

for a 150000 mortgage at 7.5% interest rates you will pay a total of £332546 over 25 years.

For a 120000 mortgage you will pay 266037. Combine that with saving in capital sum, and youve saved £86509. Nice!

Assuming say £600PCM for rent, £86509 gets you about, oh 12 years.

So it does very much appear as if waiting a few years for cheaper house prices, whilst saving up a nice deposit, is a no brainer in terms of how much it will save you.

Haven't factored in the preferential rates that a larger deposit will get you of course. But you get the picture.