As house prices fall in the UK for the year in terms of gold house prices are back at 1986 levels

This week we got the Halifax house prices index. They report that the average cost of house in the UK is now £160,941. From the report:

•  House prices in the three months to May were 0.8% higher than in the preceding three months (December 2011-February 2012). This was the second successive increase in this measure of the underlying trend in prices following six consecutive falls between October 2011 and March 2012. It was the biggest three monthly increase since August 2011 (+0.9%)

• On a monthly basis, house prices increased by 0.5% in May. This follows the significant monthly rises and falls recorded in the previous two months: +2.2% in March and -2.3% in April

• Prices in the three months to May were 0.1% lower than in the same period a year earlier. This continued the improving trend in the annual rate and was the smallest yearly decline in house prices for 17 months (October 2010:+1.2%)

• Small rise in the average UK house price in the first five months of 2012. The UK average price in May 2012 was 0.7% higher than in December 2011, at £160,941.

• Sharp fall in sales in April. Home sales fell by 18% between March and April, providing further evidence that the expiry of the stamp duty holiday for first-time buyers at the end of March encouraged some to bring forward their house purchases to beat the deadline. Nonetheless, sales were still 3% higher than in April 2011. (Source: HMRC)

• Housing market conditions have tightened slightly since the end of 2011. The supply / demand balance in the market, as measured by the ratio of house sales to the stock of unsold properties, has tightened a little in recent months. This modest improvement in market conditions has probably helped to support house prices. (Source: RICS’s monthly survey)

Once again as we can see on a chart the fall in house prices from their peak in mid 2007 doesn’t look that pronounced, falling nearly 13% in 5 years:

(Click for sharper image)

But it is when you measure house prices in terms of gold that the fall-off is a lot more obvious. It now takes 157 ounces of gold to buy the average house in the UK. This is the same level they were back in 1986.

(Click for sharper image)

In 1980, which was when gold prices peaked during its last bull run, the amount of gold needed to buy the average house in the UK got as low as 85 ounces. To get back to those levels again today would either mean an average house cost of £85,000 or a gold price of £1900.

Related posts:

1. As UK house prices fall they’re now back to 1986 prices when priced in gold
2. House prices fall again making fresh lows – now back to 1986 prices
3. UK houses fall yet again, now at 1986 prices as the gold:house price ratio collapses
4. UK house prices fall 2.3% for the year: Gold:House ratio now at 151:1
5. And the hits keep coming: UK house prices fall 1.9% from a year ago – now down 80% when measured in gold

Link to this article: : http://www.goldmadesimplenews.com/gold/as-house-prices-fall-in-the-uk-for-the-year-in-terms-of-gold-house-prices-are-back-at-1986-levels-7089/

Posted by Thomas Paterson on Jun 8 2012. Filed under Analysis, Gold News, Markets. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.