Research by the online estate agent of over a million homes shows that house prices have risen £3,667 (1.7%) since January this year. analyst Samantha Baden said “The rise in house prices shows confidence in the property market remains steady as a result of homeowners realising the old adage is true – in times of trouble invest in bricks and mortar. Despite economic tough times, property has proven a far more solid investment than might have been thought at the start of the year. This growth is encouraging amid a still struggling economy.”

This is being touted as positive news by some of the media (Express and Mail).

But what the research actually shows is the rise in asking prices, not prices actually achieved.

The research shows that asking prices are up by 2.9% in the West midlands, 2.6% in the North East and 2.3% in London.

In fact everywhere people believe their house values are increasing except Wales where they fell 0.4%.

In reality the actual value of homes (you know, the price that they really sell for has remained fairly level over the last year or so as can be seen from this graph. A graph that we keep putting up to show the amalgamation of the house price indexes including Halifax, Nationwide and the Land registry. You can also see the line at the top, which is the Rightmove asking price index.


House Price Indexes – click for larger image

Do not be fooled by house asking price figures, they mean nothing other than the wishes of house sellers and their agents.

Look at this issue through the looking glass of taxes, wages, mortgage availability and job security. Then ask yourself how many people are really going to be in a position to take the plunge into buying and how much will they really want to pay or be able to pay.

If a house remains unsold it does not mean that people cannot afford it, it means that proper price discovery has not yet taken place (check ou the video to the right on property v gold). Asking prices are just dream prices.

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