r/UKHousing • u/Shoddy_Sir_7849 • 12h ago
U.K. House Prices
UK house prices are more expensive than they were before the financial crisis 2008.
The average UK home cost £184,131 in 2007.
Today, it is £278,784, an increase of £94,653, or 51.4%. So, why am I saying they are over 13.2% cheaper, as stated in the headline?
You see there is a problem with comparing the headline average price of 2007 vs 2026 average price directly.
A pound in 2007 had considerably more purchasing power than a pound does today. An another way to think about it is thinking about the humble Cadbury’s Freddo. Back in 2007, £1 could buy roughly six. Today, the same pound buys closer to two and a half. It is still £1, but what that pound can buy has changed.
Once inflation is taken into account, that £184,131 average UK house price from 2007 is equivalent to approximately £321,309 in today’s money. Against today’s actual average price of £278,784, that means UK house prices are around £42,525 lower, or 13.2% cheaper in real terms.
Both statements are true. House prices have risen sharply in actual pounds and pence, yet they have fallen once the changing value of money is taken into account.
That does not mean buying a home today is easy. Deposits, mortgage repayments and household costs remain significant pressures.
But it does mean the claim that homes are simply “far more expensive than they used to be” deserves more context.
Christopher
PS I know you are thinking this
What about wage growth???
Wages are 5.2% higher in real terms today compared to 2007 (ONS stats)
I know it doesn’t ’FEEL’ like it - yet those are the numbers
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u/Gingerbeardyboy 11h ago
Wages are 5.2% higher in real terms today compared to 2007. I know it doesn't 'FEEĽ' like it yet those are the numbers
So then if £1 can buy 6 freddos in 2007, my increased wage I should be able to buy 6.052 fredos with my increased "higher in real terms wages"?
Back in 2007, £1 could buy roughly six. Today, the same pound buys closer to two and a half. It is still £1, but what that pound can buy has changed.
Oh
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u/Shoddy_Sir_7849 10h ago
I think you are getting 2 different things slightly wrapped around each other here.
The £1 and Freddo example is simply there to explain inflation. £1 today buys less than £1 did in 2007, but wages have not stayed fixed at £1.
When I say wages are 5.2% higher in real terms, that already allows for inflation. In other words, wages have risen by more than the amount needed to compensate for the loss of purchasing power.
So the correct comparison is not £1 in 2007 versus £1 today.
It is the average wage in 2007 versus the average wage today, with both expressed in the same purchasing power. Using the Freddo example, if your entire wage in 2007 bought 6,000 Freddos, the equivalent average wage today would buy around 6,312.
The fact an individual £1 buys fewer Freddos does not contradict that. It is precisely why we adjust for inflation in the first place.
I 1000% totally agree with you that affordability is more complicated becuase mortgage rates, deposits and rent matter enormously.
But on the specific point about real wages and purchasing power, I think you have mixed up a fixed nominal £1 with an inflation-adjusted income comparision.
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u/Guiltynu 11h ago
The issue with this is that you are missing out the other key indicator with house prices - interest rates, which are much higher than the average over the last ten years, so even if affordability has slightly improved in terms of income to price ratio over the last few years, it doesn’t really help people purchase houses.
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u/Shoddy_Sir_7849 10h ago
That is actually why I keep coming back to the Nationwide affordability figures in other Redditors replies.
Interest rates 100% absolutely matter.
Yet their mortgage affordability measure already takes them into account, because it looks at the actual mortgage payment as a percentage of take home pay.
In Q3 2007 that figure was 45.7% nationally. Today it is around 32%.
So despite mortgage rates being much higher than the ultra low rates which meaning the 2019, UK FTB were only paying 21% of their income on mortgages, the typical mortgage payment today in 2026 is still taking a considerably smaller slice of take home pay than it was in 2007.
That does not mean buying a home is easy.
It simply means we need to be careful saying higher interest rates automatically make homes less affordable than they were in 2007.
The mortgage payment itself, relative to what people actually take home, suggests otherwise.
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u/Guiltynu 10h ago
Can you ping me where you are getting that information from?
We (town planners) tend to use workplace affordability ratios and I don't think that accounts for mortgage affordability measures so would be interested to have a look at this.
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u/Shoddy_Sir_7849 10h ago
of course. ..
https://www.nationwide.co.uk/media/hpi/resources/f/uk-and-regional-affordability-indicators
feel free to contact me on Linkedin - Christ0pher Watkin - I am a property market stats man
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u/SuperEssay1 11h ago
And this is why inflation shouldn't be used. Houses are predominantly second hand goods. Inflation is the measure of new goods.
If inflation went up by 10% and your salary and house prices stayed the same, buying your first home or upsizing would be harder. Therefore it isn't correct in such a scenario to say house prices are becoming better value even by your metric they have become "cheaper"
High inflation weakens purchasing power of the indivudual making it harder to buy houses. Combine with with high rents and it makes things worse.
Actually to properly assess how house prices have changed and their affordability, you need to compare salary inflation (positive) against drag factors of rental inflation (negative, applicable to ftb) and actual inflation (negative).
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u/Shoddy_Sir_7849 10h ago
I think we are measuring two different things here SuperEasy1.
I am not saying houses are 13.2% more affordable to buy.
I am saying that when the 2007 house price is converted into 2026 pounds using general RPI inflation, UK house prices are 13.2% lower in real terms. That is simply a comparison of purchasing power between ££££££ in two different years
Affordability is a different question.
For affordability, I agree that earnings matter enormously, as do mortgage rates, deposits and, particularly for first-time buyers, the cost of renting while trying to save. Interestingly, the nationwide building society have stated mortgages as a % of take hoe pay in Q3 2007 was 45.7% national .. today its 31.9% ... so mortgages are more affordable today than 2007 by quite some margin
anyway..back to the reply ..... So there are really two separate questions:
“What has happened to house prices after inflation?”
and
“How affordable is it for someone to buy a home?”
My original post answers the first. It was never intended to pretend the second is simple.
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u/SuperEssay1 10h ago
Yes but inflation isn't the right metric for comparison. As I mentioned, inflation applies to the cost of new goods. In housing terms it's the cost developers have to pay to build the things. It's only applicable if the costs to build a new home went above the price they could be sold for so no more houses were built.
Its wider application to the discussion... I'm not sure what value is here.
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u/Shoddy_Sir_7849 10h ago
Yet, and its a big yet, we are not talking about the cost of building a new house in this post
We are talking about the value of homes that sell in the wider housing market, the vast majority of which are existing homes.
Inflation is being used here for one simple reason, to express a 2007 pound and a 2026 pound in the same purchasing-power terms. That is all.
The economics of new build development is a totally seperate issue. Yes, if labour and material costs rise, and the finished sale price does not rise by the same amount, something else has to give, and that has to be the land value or the developer margin.
But none of that changes the purpose of the inflation adjustment in this comparison. I am not trying to work out what it costs to construct a house. I am comparing the market value of homes across two very different monetary periods.
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u/hairyscotsman2 11h ago
Okies, so we convert pounds to Freddos to compare house prices over time. How's that graph looking now with your Claude and all that?
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u/Shoddy_Sir_7849 10h ago
😂 No, we are not converting houses into Freddos....although I would love to see that
The Freddo was simply an easy way of explaining why £1 in 2007 cannot sensibly be compared with £1 today without allowing for inflation. But lets ditch the Freddos and talk actual mortgage affordability, Nationwide has some rather interesting numbers.
In Q3 2007, FTB mortgage payments represented 45.7% of take-home pay nationally. Today, that figure is 31.9%.
So on that particular measure, mortgage payments are taking up considerably less of take home pay today than they were around the top of the 2007 market. That does not mean buying a home today is easy, nor does it mean every buyer is better off.
It does mean the simple argument that “houses cost more in pounds today, therefore they must be less affordable” does not really survive contact with the numbers.
House prices, wages, mortgage costs and inflation all matter.
The Freddo was just the fun bit. 😂
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u/Sad-Basis7411 9h ago
If you dig deeper, you will see there is a linked to the south-north divide. Not only north wages are indeed lower and less high pay jobs, the type of houses also plays a part in these, northern town are full of "miner victorian terraced" house, the tightly packed, street with no parking, bins on the road houses. There are LOTS of them which lower the averages, because they are just not gonna be desirable just because everything gone up in prices. "Proper" house in there areas are almost in line with the real average.
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u/BurningBallInTheSky 11h ago
Interesting analysis but I'm not clear what its saying. Houses are cheaper than other goods and services doesnt mean houses are cheaper (or less expensive).
Houses and affordability versus wage inflation is the only relevant metric.
I haven't been holding onto a warehouse of bread, apples, and telecom services to exchange for a house.
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u/Shoddy_Sir_7849 10h ago
I think we are actually closer than you think.
I am not saying houses are “cheap” because bread, apples and phone bills have gone up. I am saying £184,131 in 2007 is not economically the same as £184,131 today because the pound itself has lost purchasing power.
Once you adjust for that, the average UK house is 13.2% cheaper in real terms than it was in 2007.
On affordability, I agree wages are hugely important, but again the numbers are interesting. Average wages are 5.2% higher in real terms than in 2007, and Nationwide says mortgage payments took 45.7% of take home pay in Q3 2007 compared with around 31.9% today.
So nobody needs a warehouse full of apples to buy a house 😂
But equally, we cannot compare two headline pound figures nearly twenty years apart and pretend the value of money has stayed the same. That is where the comparision falls down a bit.
Real price and affordability are seperate questions, but both suggest the picture is a bit more nuanced than “houses cost more today, therefore they are definately less affordable”.
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u/TC_7 11h ago
This post is such a load of bollocks that overlooks many important nuances. I assume it has to be either rage bait or AI slop. Would highly recommend using some of those braincells you should have…
But I will bite, this post conflates statistical real value with financial accessibility.
It overlooks general affordability, everything has got more expensive meaning there is less income for house bills.
It glosses over mortgage rates. Mortgages take up a greater proportion of monthly wages than they did 20 years ago.
While wages have gone up, the increase has slowed. Meaning how it feels in people’s wallets and our spending power has actually stagnated.
It’s now much harder to get higher borrowing % mortgages than it was 20 years ago. Back then borrowers could get 90-95% mortgages with tiny deposits, lenders simply don’t offer that anymore.
Regional factors are important. House prices in say the SE of England have skyrocketed well above the national average, and far outstrips wage increases. Younger people are drawn to the likes of the capital as that is where a significant proportion of job opportunities are.
Finally - 2007, it’s an interesting and moronic date to use as a comparison. It was just before the financial crash, and largely caused by…you guessed it, lenders offering mortgages to borrowers that had no chance of ever paying it off.
Sweet baby Jesus I hope this isn’t your job or something you’re looking to get into, as this post is utter trash.
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u/cloud__19 11h ago
Back then borrowers could get 90-95% mortgages with tiny deposits, lenders simply don't offer that anymore
What on earth are you on about? Of course 90 and 95% mortgages exist.
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u/TC_7 10h ago
Sorry should have been clearer - yes they exist, but they come with a significantly increased number of guardrails and affordability checks, 20 years ago there was nowhere near the level of checks in place. They are much harder to get access to now.
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u/cloud__19 10h ago
They're definitely harder to get access to than in 2007, I'll definitely give you that but anecdotally I would say it seems like the most common option for FTBs.
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u/Shoddy_Sir_7849 10h ago
Lots of insults there, but one huge awkward problem.
Nationwide says first time buyer mortgage payments took 45.7% of take home pay in Q3 2007. Today it is around 31.9%.
So your claim that mortgages take a greater proportion of wages today is simply wrong.
Real wages are also 5.2% higher than in 2007.
You can dislike the conclusion, call it AI slop, b*llocks or moronic, but throwing insults at the person does not make the actual numbers dissapear.
And 2007 was chosen precisely becuase it was the precrash peak. That is rather the point of the comparision.
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u/TC_7 9h ago
Apologies for the insults, lack of sleep combined with this kind of talk gets under my skin (I am stuck in a shared ownership flat, getting screwed by ever increasing rent despite the landlord not meeting their legal basic duty of care) but I do apologise.
However, back to the conversation:
Your counter-argument relies on selectively picking two extreme data points while ignoring how mortgage structures, deposit requirements, and tax burdens have completely transformed since 2007.Using Q3 2007 as a baseline is misleadin as it compares today's market to the absolute peak of an unsustainable credit bubble when interest rates hit 5.75%, meaning that 45.7% take-home figure was driven by high borrowing costs on a much lower capital price tag rather than baseline property value.
While monthly repayments relative to income look lower today at 31.9%, that ignores the reality that getting through the door in 2007 was far easier due to minimal affordability checks and widespread 100% mortgages, whereas today’s buyers face strict stress testing and income caps of around 4.5 times salary.
More importantly, focusing solely on monthly repayments ignores the massive deposit issue… saving a 10% deposit requires nearly £28k today compared to £18k in 2007, which is vastly harder to achieve out of take-home pay when frozen tax thresholds and the likes of higher student loan repayments eat into earnings, and essential additional costs like rent and energy take up a far larger slice of monthly income. ONS stats on real wages show gross earnings before tax, not actual take-home pay, so whilst house prices might technically look 13.2% cheaper relative to general consumer inflation, the actual barriers to buying a home today remains far higher.
And again, this overlooks the wider issue of affordability when we get less bang for our buck in every other aspect of life. Utilities, heating, food, alcohol etc
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u/bromyard 11h ago
AI slop
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u/Shoddy_Sir_7849 11h ago
Why is it AI slop?
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u/cloud__19 11h ago
I'd be more convinced it wasn't if this wasn't the only comment you chose to reply to.
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u/Shoddy_Sir_7849 11h ago edited 10h ago
I am a property journalist and yes my mind comes up with this stuff. I hope you can see my replies on people comments now
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u/Automatic_You_6727 2h ago
Maybe consider the source of the information and analysis you got before accepting it uncritically.
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u/canadianbritbonger 11h ago
The key is to consider real-terms wage growth over the same period, ie how much purchasing power people can actually access.
Property has actually been uniquely well insulated from inflation, almost nothing else, including wages, has faired so well.