The real state of Britain's housing market

According to the Royal Institution of Chartered Surveyors, the housing market is recovering, and is now at its healthiest since 2010. So it feels like an appropriate time to examine how house prices have fared since the start of the crisis.

Here, to start with, are how UK house prices have changed since August 2007, more or less the peak in the market, in nominal terms – in other words a pure cash comparison.

However, during that period the cost of living has also increased pretty sharply – by almost a fifth, to be precise. So a better representative for how house prices have performed in real terms involved adjusting them for inflation (I’ve used CPI in the chart below). Here’s what the market looks like on that basis:

Here, finally, are UK house prices adjusted for wage inflation. Wages have not increased as fast as wider inflation over the past years, so on this basis the fall in house prices is less dramatic.

For more relatively recent stuff on the UK property market and those enormous regional variations, also see this recent piece.