Capital Appreciation - look to long-term trends, not short-term

Property investors should not look to closely at current market mayhem and instead rely on long-term trends for capital appreciation.

That’s the view of investment service easyMoney which has analysed the speed at which the UK average house price has surpassed each £50,000 house price threshold. 

With the market cooling in recent months, easyMoney forecasts that the average UK house price won’t hit the £300,000 threshold until August 2025 - but that should not be a deterrent to investors, it says.

The data shows that the UK’s average house price hit the £10,000 mark for the first time in January 1976. 

From there, it took 4,565 days, or 12.5 years, for this average to increase to £50,000 which it did in July 1988. In between these two dates, of course, the UK endured the early 1980s recession.

It then took 4,963 days (13.6 years) for the average price to climb from £50,000 to £100,000, which it reached in February 2002. Of course, this timeline would have been significantly influenced by the 1990s economic downturn. 

However, the average UK house price then reached the £150,000 benchmark by August 2004, taking just 2.5 years or 912 days. 

It can reasonably be assumed that this rapid price boom was at least somewhat fuelled by the mortgage bubble created by the subprime scandal, that started in the US and crept over to the UK before eventually resulting in the financial crisis of 2007/8. 

When this financial crisis hit, it resulted in a slowing of house price growth in the UK to the extent that it took another 11 years (3,986 days) to reach the £200,000 milestone, which it did in July 2015. 

Following the financial crisis, the subsequent market recovery, it took just 5.6 years (2,070 days) to reach the next milestone of £250,000 in March 2021. 

This rapid growth was very much fuelled by the pandemic house price boom starting in the summer of 2020. 

Today, the average house price in the UK sits just shy of £290,000, so one would think that the next milestone of £300,000 will imminently be upon us. 

However, due to cooling market conditions, easyMoney estimates that it will actually take until the end of August 2025 to reach the £300,000 mark. 

This would mean a space of 4.4 years between the £250,000 and £300,000 thresholds. It’s worth noting that, despite today’s cooling conditions, this is still less than the 5.6 years it took for the average price to grow from £200K to £250K. 

easyMoney chief executive Jason Ferrando says: “On a short-term basis, the UK housing market is certainly susceptible to wider economic ebbs, flows, and woes. But when you step back and look at the market’s long-term performance, it’s clear how strong, reliable, and resilient UK housing is as an investment asset. 

As such, if investors are attracted to the property market, we would encourage them to shake off any concerns about the immediate economic landscape and instead look at long-term performance and consistency of the market's performance over the last 50 years.”