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London has fallen

 Yeah? I think you should have brought more men.

It’s the first week in January so all talk turns to the state of the housing market. Specifically, the first of the house price indices, this time from our old friends at Nationwide.

According to the building society, house price growth saw a modest slowdown in 2017, with London the weakest performing region.

Its latest House Price Index shows that average prices have grown by 2.6% over the past 12 months, down from the 4.5% growth in 2016 and 2015. So, that’s not actually a fall, so much as a not-increasing-so-fast.

London is down, however, for the first time since 2004, although it is by a very modest 0.5%. In any case, London is probably not the best barometer of housing price health, since, by its very nature as the capital city, it covers the whole picture from pockets of relative deprivation to ginormous mega-mansions owned, but not necessarily lived in by various oligarchs.

Housing in general is one of those industries that defines the concept of supply and demand. Restrict the supply of houses and the prices will stay high. It’s never quite as simple as that, of course, as the Nationwide points out, low mortgage rates and pretty healthy employment figures help to keep demand high, on the other hand, concerns about increasing pressure on household incomes, and concerns about job stability tend to push down consumer confidence which reduces householders’ enthusiasm for moving or even renovating.

Looking ahead to 2018, various housing industry commentators have differing views about what might happen, though most expect prices to continue rising. The Nationwide expects house prices for the year to rise by about 1%, others, including the Halifax, that other go-to price-index, estimate prices will rise between 1% and 3% depending on geographical region.

Like London, the UK is a real mix of the very deprived and the ridiculously rich areas and everything in between. House prices is one of the things, but not the only thing, that drives consumer confidence and housing transactions are a major drive of housing repair, maintenance and improvement work. That’s a given and householder confidence is one of the key drivers behind merchant sales, most particularly in the RMI market. That’s another given. I remember one merchant telling me years ago that R is repair, which has to be done, not matter what state the economy, M is maintenance, which is good to do, but not vital and I is improvement which doesn’t really need to be done at all unless you really want to and can afford to.

So, where does this leave us at the beginning of 2018? Pretty much where it left us at the end of 2017, I guess.

Brexit is rumbling on, Trump is doing Lord knows what, the Government wants to build a lot more houses, but we’re not sure who’s going to actually build them or where they will be built and house prices may or may not go up or down, taking RMI and confidence with them, which ever direction they go.

Incidentally, the title and quote refer to a fun, but basically hokum,


action film starring Gerard Butler. And yes, it is a shameless excuse to use a picture of him looking mean and moody, with a tube train and a gun.

Happy New Year.




About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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