House prices up 273% but will this continue?

House prices have risen by 273% over 5o years according to research produced by the Halifax.

Anybody who has bought a buy-to-let property at the start of the nineties will probably not been surprised by this. The 'naughties' infact were the top performing decade over the last 50 years with prices showing a real or inflation adjusted growth rate of 5%. This compares to 2.7% over the entire 50 years.

What these figure do indicate that growth has not been even. For instance the decade previous between 89 and 99 house prices actually fell by 2.4% in real terms. Could it be that on ten year cycles we have a weak decade followed by a strong decade? I suspect that this may be the case particularly when you factor in the actions of politicians and policy makers who are looking to reign in the banks. This will inevitably have a knock on impact on their ability to lend.

Will landords be disappointed in the coming decade?

Therefore those landlords looking to repeat the growth rates in the value of their investment may be disappointed in the coming decade.

Historically the periods of the strongest growth were shown in the following periods:

These are the years 1971-73, 1977-1980, 1985-89 and the most pronounced of all, that between 1998 and 2007.

Each of these four periods of sharp rises in house prices in real terms was followed by a period of significant falls, and the most recent decade has been no exception to that pattern.

The only positive is that here in the crowded UK with our green belts and restrictive planning policies is that our growth rate in house prices has been greater than those of our continental cousins according to the Barker Review.

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