There are some really interesting dynamics happening in the property market with regards to house price growth at the moment which few are reporting. Year-on-year, we are seeing some areas doing really well including Belfast (+6.9 to 10.3%) and Liverpool (+10% to 3.5%) according to Land Registry and Hometrack.

Other areas such as London aren’t doing so well – with the Land Registry suggesting that prices are stagnating. In Brighton and Hove we are seeing property prices rising between 0.9% according to Hometrack and 1.5% according to the Land Registry.

However, we now have a lot more information about what has happened to property prices over time and the problem with quoting year-on-year prices is that it doesn’t give agents – or buyers and sellers – the real picture about property prices and answer questions such as ‘is this a good time to buy or sell’?

The table below shows one thing that no-one is really reporting on that means now is, for many, a good time to buy, even with mortgages at a slightly higher rate than they are likely to be over the long term.

Belfast and Liverpool

Belfast – this maybe a top performing city year-on-year, but average prices in Belfast in 2007/8 were £213,626 before the credit crunch hit. They are now £168,979, so 21% lower than they were nearly 20 years ago. And if they had risen in line with inflation, they would be around £340,000, twice what they are today.

Although prices are rising most in Belfast year-on-year, it doesn’t mean that they aren’t still good value versus pre-credit crunch prices.”

So, although prices are rising most in Belfast year-on-year, it doesn’t mean that they aren’t still good value versus pre-credit crunch prices. And, if you look back at property prices in Belfast in 2022, prior to mortgage rates rapidly rising, the average price was around £152,000. So despite much higher mortgage rates, prices have still managed to rise by 11%. And as far as a rise is concerned, this is in line with general inflation which rose during this time by 10%.

Liverpool has some very different stats. In 2007/8 the average property price was just over £130,000. Since then, property prices have grown by 35%, while inflation has risen by around 60%. So, Liverpool property prices are also good value.

If they had risen in line with wages, the average price would be worth over £200,000, instead they are worth just over £176,000. In 2022, before Liz Truss became Prime Minister, the average price was just over £165,000, so they have only risen by 6.7%, less than 10% inflation. Overall, property prices are still good value and have risen less than general inflation for nearly 20 years.

House price underperformance

For areas that haven’t done so well, the picture is a little different. In London, the average price prior to the credit crunch for a property was just under £300,000. Now they are just under £550,000, so they have increased by over 80% – well in excess of inflation ‘on average’.

Since 2022 though, they are actually not bad value for money. The average price in 2022 was £575,000, so £25,000 less than they were three years ago, so since 2022, property prices haven’t kept up with inflation. Although property prices have risen a lot since the credit crunch, currently, for those that haven’t got on the ladder over the last few years, now would be a good time to start looking.

For sellers in London, what’s important is that they know how much equity they have gained, if any, and if this is enough for them to move. For example, for those that bought five years ago, property prices have increased from £510,000 to £550,000, so they will have seen just enough of a rise in equity to move home again if they wish, although quite a bit of this money will be taken up with Stamp Duty Land Tax if they are trading up.

For those that bought 10 years ago, they will have earned over double that amount ‘on average’, generating around £100,000 additional equity and more if they have been on a repayment mortgage, so will have plenty of equity to move up – or down.

Brighton and Hove shows a similar story. Property prices may not be moving up much year-on-year, but they have increased by 64% on average since 2007/8, which although seems a lot, means they have risen in line with inflation. So for those that bought with cash, the value of the property in real terms hasn’t increased at all.

However, property prices are relative and if the owner had a mortgage, then they will have seen enough equity growth to trade upwards if they wish. And, since 2022, property prices, on average are now £423,550, nearly £20,000 less than they were a few years ago. So now is a good time to buy, but for those that bought since 2022, if they need to move, they are going to have to know that their property is likely to not have increased at all, or have fallen in value.

Since 2022, 10 of our cities still have house price averages that are lower today than they were a few years ago.”

Since 2022, 10 of our cities still have house price averages that are lower today than they were a few years ago, while 10 cities/towns have increased, but only one of them: Belfast has increased in line with inflation.

What buyers and sellers need to understand is property prices over time, because year-on-year house price changes don’t really mean that much. What really matters is can they afford to buy today and can they afford to sell and secure their next home?

Appendix: City/town property indices price tracking

For city/town tracking, we use Land Registry (government data) and Zoopla/Hometrack. The Land Registry data is useful because we can analyse how property prices have changed over time and this helps us to put today’s price information into context.

The Zoopla/Hometrack data is useful as they take into account the change in mix of property transactions during the pandemic to houses away from flats. This has meant the likes of the Land Registry and other indices have over exaggerated price changes year on year.