There have been a number of reports about house prices falling of late. However, the focus has been on the headlines. And the headlines do not always paint the whole picture. Moreover, there is commentary about “what” is happening, but I believe we must now use all the data we have as a starting point to better understand the “why” – why are prices falling for example.

We must also be careful how we use the data to create headlines, because too much talk about UK house prices falling could lead to a downward spiral. A self-fulfilling prophesy if you like. Instead, let’s use data to find solutions – not create more problems.

Some of us have seen house prices fall before. The last time it hurt was after the Financial Crisis, which took about six years for house prices to recover. However, the market is different now. But we do still need to understand it more.

Water Finds Its Own Level Now writing my thoughts here could come back and bite me, but I believe we need a bit of perspective about current house prices. Go back a few years to the summer of 2020 and the Stamp Duty holiday was introduced (remember that?). This fuelled an artificially over-heated market. This naturally accelerated house price growth quite significantly by stimulating strong levels of demand.

When I looked at house price data provided openly by Nationwide, it showed that in the two years after the Stamp Duty holiday was introduced, average property prices grew by 24% across the UK. We have since seen prices fall back, but nonetheless, average house prices have still grown by 19% since the summer of 2020. This is still strong growth over a short period, although those buying new property in the last 12 months will not share the same perspective!

My main point is that we can’t ignore the impact the Stamp Duty holiday had on the property market. It stimulated an artificial and overheated market. And I what I believe we are seeing now is that prices are reverting back to a more natural level. After all, water does find its own level.

Now you can reach different conclusions with data and statistics, but when I put a trend line on house price prices over the last decade, then that showed that current house prices are “on-trend”.

The Pandemic Effect As well as that Stamp Duty holiday, the Pandemic has led to some interesting data outcomes. At the time of the Pandemic, it was often reported about people moving out to that “very big house in the country”.  The Blur effect, as I call it. Add to that, many people now work remotely, and this has changed the housing landscape a bit. For now, at least.

For example, areas such as North of England, Yorkshire & Humberside and Wales have seen property price growth since the Stamp Duty holiday greater than in the previous 10 years – even allowing for recent price falls.

London, on the other hand, has been hit hardest. Property prices traditionally grew faster in this region than others. Since the aforementioned Holiday, London prices have risen by 9% – lower than any other region. And those owning properties in London have always been used to stronger growth.

What About First Time Buyer Properties? Looking at the data for prices of property bought by first time buyers, again London comes off worse with just an 8% growth since that Holiday. Whereas East Midlands, Wales and Northern Ireland have all seen the strongest growth at 25%, 26% and 28% respectively.

What Does This All Mean?

There is that saying, there are “lies, damned lies and statistics”. I am a bit nerdy and love data and I love statistics. When used correctly, they can paint the right picture.

We can all look at house price data and use different variables and starting points to get to an answer or headline that we want. What we need is bigger picture analysis that is shared and understood by the masses, not just a few economists and statisticians. We need good, objective reporting in the national press, so people don’t get spooked when they see headlines about property prices falling.

In a world where there is so much data, we also need a bit more collaboration is required to help everyone get a sense of reality. We need to delve deeper into trends and regions. London is a big place, for example. So, what are property prices doing in different parts of London. What areas of Yorkshire are strongest. What property types are growing more in value – is it new builds and those with higher EPC ratings?

And what drives property prices up. Yes, it is down to supply and demand, but what fuels demand in the first place? And are some areas having a bigger shortage of supply, which pushes prices higher.

There are lots of questions that need answers. And we need this because we know we need more properties built. But what type and where and for whom needs more thought. And the impact on the local economy and infrastructure must be considered too.

As I said, I am a big fan of data. It can be used to tell a story. But we need to use data not just to create headlines – but to create solutions to the challenges the market will continue to face.

Jeff Knight is marketing strategist and director at The Mortgage Marketing Forum