Talking about house prices, for all the wrong reasons

Crash landing: the price decline in real terms” this time around is set to be similar to the housing slumps of 1989-92 and after the 2007-09 global financial crisis

- Paul Dales

HOUSE prices may soon leap above the weather as the number one topic of conversation, but for all the wrong reasons.

The housing market has been on a great run since the pandemic caused people to seek and place greater value on more living space. In the two years since July 2020, house prices rose by 24%. That's almost double the 13% increase in the prices households paid for items in the shops over the same period.

But data released by Nationwide Building Society on Tuesday showed that things were changing. The 0.9% fall in house prices in the month of October was the first decline since a fleeting drop in July 2021. It meant that the average house price declined by £4,000 in October, from £272,000 to £268,000.

This is just the beginning too. M colleagues at Capital Economics who spend all day analysing the housing market think prices across the country will decline by around 12% over the next 18 months. They are forecasting a slightly bigger fall of 15% in London.