Has the UK Already Had Its House Price Crash?

Every month I run an analysis which looks at the Affordability and Value of UK Property.  This analysis uses the Nationwide House Price Index which measures the price of a standard house priced in Pound Sterling (£’s). 

In the current world we live there is one big problem with this Index and in fact all the other UK House Price Indices.  All of them are priced in Pound Sterling which is not a fixed peg in the ground for many reasons some of which include:

• We live in a globalised world however only 0.9% of the World’s population use the £ as their currency;
• The UK Government, Bank of England, Banks and many other vested interests have done everything in their power to keep asset prices in the UK high at the expense of just about everything else.  They’ve been relatively successful so far using methods such £375 billion of Quantitative Easing, 0.5% Official Bank Rates and the Funding for Lending Scheme.  This has allowed inflation to run a little at the expense of an official remit and led to negative real interest rates which among other things has resulted in Sterling falling in value against the currencies that 99.1% of the world use; and
• The UK for all its problems is compared to the rest of the World a very attractive place to live and unlike a lot of countries actually has a Rule of Law.  It’s not perfect but as a person who has travelled the world for my work I ask where is.  This means a lot of people want to migrate and live here.

My first chart reminds us of the price of housing priced in Sterling.  If you’re a UK resident earning in Sterling, saving in Sterling and investing in Sterling this is what you’ll see.  Since the peak prices in nominal terms have fallen 12.8%.  Hardly a House Price Crash, more a small adjustment.

Click to enlarge

What about Prices measured in the most widely held Reserve Currency, the US Dollar?  Measured in this currency we see UK house prices down 33.7%.

Click to enlarge

What about Prices measured in the currency used by the Workshop of the World, The Chinese Yuan or Renminbi?   Measured in this currency we see UK house prices down 44.3%.

 

Click to enlarge

What about Prices measured in the currency used by the country that provides Back Office Services to the World, The Indian Rupee?   Measured in this currency we only see a very small fall in UK house prices with them down only 10.4%.

Click to enlarge

What about Prices measured in a currency used by a European country that still supports Manufacturing and runs a relatively prudent economy, The Swiss Franc?  Measured in this currency we see UK house prices down 48.7%.

Click to enlarge

What about Prices measured in a currency that might be considered a Commodity Currency, The Australian Dollar?  Measured in this currency we see UK house prices down 45.1%.

Click to enlarge

What about Prices measured in a second Commodity Currency, The Canadian Dollar?  Measured in this currency we see UK house prices down 37.6%.

Click to enlarge

Finally what about Prices measured in the oldest Currency of all, Ounces of Gold?  Measured in this currency we see UK house prices down 78.4%.

Click to enlarge

I’m now starting to wonder if the UK has already had its House Price Crash albeit one where the majority of the UK population has not been allowed to participate.  What do you think?

As always Do Your Own Research

Assumptions:

• The February 2013 Nationwide House Price is estimated
• Currency Prices are Average Monthly Asking Prices