Over the last ten years property prices have increased at a staggering rate and in some areas prices have in fact trebled. This has provided many people with problems in getting their feet onto the property ladder, these increases do not just affect people who are trying to buy, but all aspects of property including renting, selling or even just keeping up with the mortgage payments are affected. The average price of a property to buy in the UK today is over £175,000, for a first time buyer who earns an average wage this property could be deemed too expensive. Only recently a study was conducted which indicated a third of peoples wages was being spent on their mortgages, this is even before other expenses are taken into consideration.

Trend Analysis
The property market has seen this upward trend over the last decade due to a number of factors. The three main reasons are that the interest rates have been very low over that period; this in turn has meant that mortgage rates have been low and enabled people to afford more in mortgage payments. Secondly, the country has been very sound economically, employment has been growing and people are more stable in their jobs. The third reason is the shear lack of supply, the number of houses on the market is very low and demand for them is high, this in turn leads to supply and demand effects which will push the prices up. A lack of supply and an increase in demand and property prices go up, a lack of demand and increase in supply and property prices go down.

During 2005 it appeared that the market was about to take a downward trend and many believed that this was the start of the house price crash. This turned out not to be the case and the market surged again because of the UK economy improving, the influx of immigrants into the country increasing the demand and the reduction in the mortgage interest rates. The housing market relies heavily on external factors and to sustain a rise in prices then the economy needs to be consistently growing. Consumer spending and confidence can be a good indicator and as long as these are high then property prices will continue to grow or at least not fall. It is important for the stability of the housing market that mortgage rates are kept stable to encourage new buyers into the market and keep the property flow moving.

House Price Indexes
There are many different house price indexes that can be obtained to get the latest information on property prices and the patterns and trends of growth. In essence there are so many different guides with so much differing information that it becomes almost an impossible task to know which one you can trust to be accurate. A prefect House Prices would only report on the actual sold price of every completed property in the UK. To further enhance this information the type of property and any seasonal adjustments should be included. At this time this information is not obtainable and such an index does not exist, couple this with the effects of short term house price inflation or property price volatility and the house price index becomes a very complex equation.

There are many problems with predicting house prices due to the nature of the market, no sale is the same and a house that is identical to another can sell for a different price for any number of reasons. This could be down to the location or condition of the property, maybe some extra work has taken place on the interior or an extension has been built. Even a house in the same road and in identical condition can sell for a different price due to the negotiation that takes place between buyer and seller on the price and property valuations vary from agent to agent. It is commonly thought that around 7% of property stock changes hands every year, therefore price data for property are generally only really updated every 14 years on average.

Location and the effects on House Prices
House prices can vary considerably just by location, London is a prime example of this, and this is commonly known as the London weighting. With the regeneration in different areas it is now even harder to predict house prices not just in London but throughout the country. As an example vast parts of east London are now undergoing regeneration processes and this has had a contributing factor on pushing the prices up. You could find a new build of luxury flats in the same area as a housing estate of terraced housing, even though these properties are in the same location the prices will vary considerably. This goes to prove that location can influence the house prices but this is only part of the equation and other external factors contribute to the overall pricing.

One of the biggest problems faced by anyone who is looking to buy a house is how do they know what a good price is for that property and when to buy. Most of us rely heavily on the advice given by the estate agents that are marketing the property, this is a fine approach but it does pay to do your own research as well. The internet has opened up lots of information and statistics for everyone to view and researching property prices has become a lot easier. Over the last few years the land registry information has become available on websites which gives information on every property that has been sold throughout England and Wales. These can be used as guides to help give an idea of how much similar property to the one that you are buying were sold for. Using this information solely though will not give an accurate representation as the property markets as they are very volatile and month on month prices can change. Use additional information such as trend analysis and market prediction tools to get a broader picture of the market. Also take into account other factors such as the mortgage interest rates which have a significant bearing on the rate that the property prices rise.

Summary of Average House Prices in the UK
The UK property market has seen a tremendous increase in property prices in recent years and the average price when comparing the whole of the UK together is £183,959. There still appears to be a split in the price of property from North to South but this has become smaller over the years. The average price of property in the North of England is £133,202 and as we move further south the prices increase, the midlands is £164,855 and the south east is £214,634. As we would expect there is still a significant London weighting that affects the prices within the greater London area which are now averaging at £303,739. One of the areas that has seen considerable property price growth is Northern Ireland, there are a number of factors that have contributed to this including the stabilisation of the country and the increase investment for business, a property on average would now set you back £224,816 this is the third most expensive region after the London areas. Scotland and Wales have also seen property prices increase over the last few years and on average you can expect to pay £151,178 and £154,947 respectively.              

Average House Prices in UK

All Over Uk                     £183,959
Scotland                          £151,178
Northern Ireland              £224,816
Northern                          £133,202
Nort West                        £159,062
Yorks & Humberside        £154,695
Wales                               £154,947
West Midlands                  £164,855
East Midlands                    £155,141
South West                        £203,049
Outer South East                £214,634
East Anglia                         £183,598
Outer Metropolitan Area    £259,160
Greater London                 £303,739                

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