Short video explaining the post
The data is from land registry via Office of National Statistics. It is for house prices per MSOA throughout England and Wales.
I have adjusted these figures for inflation, so it gives you the real house price growth or decline in an area when you have adjusted for inflation.
As an example. Someone buys a property for £100,000 in December 2007. They sell the property in December 2020. Between this to date there has been 41% inflation.
Or in other words, that £100,000 property in 2007 would need to sell for £141,000 in order to have comparable purchasing power.
By adjusting house prices for inflation, we can see whether property has increased or decreased in real terms from a certain date.
I use 2007 as an important indicator because it represents the peak of the last property cycle. If property has gone up above the 2007 high watermark, that shows the local market is robust.
If property goes more than 20% below the 2007 high watermark, that would indicate that the local market is weak and long term prospects are probably not so good. It’s also important to remember: if you’re an investor and you suffer capital decline, that can be catastrophic. That’s why it’s important to understand capital growth and where it occurs.
This screen grab shows inflation-adjusted capital growth from 2007. It’s best to click on the screen grab to get a full-sized high resolution image.
This screen grab shows inflation-adjusted capital growth from 2018. As above, it’s best to click on the screen grab to get a full sized high resolution image