Greater London

Regional Composition

Barking and Dagenham, Barnet, Bexley, Brent, Bromley, Camden, City of London, Croydon, Ealing, Enfield, Greenwich, Hackney, Hammersmith and Fulham, Haringey, Harrow, Havering, Hillingdon, Hounslow, Islington, Kensington and Chelsea, Kingston upon Thames, Lambeth, Lewisham, Merton, Newham, Redbridge, Richmond upon Thames, Southwark, Sutton, Tower Hamlets, Waltham Forest, Wandsworth, Westminster


Forecasting Real House Price Growth Rate*     (NEW)    

NOTE: The table reports actual and predicted annual log real house price growth rates. The forecasts are shown in blue. Predictions are for 1,2,3 and 4 quarters ahead. The reported predictions are computed as the average of forecasts generated by a battery of forecasting models, including Dynamic Model Averaging (DMA) and Dynamic Model Selection (DMS), Time-Varying Parameters (TVP) model, Bayesian VAR (BVAR) and the mean combination of individual Autoregressive Distributed Lag Model (ARDL) forecasts. Please refer to the Downloads section for detailed results of the individual model forecasts. For further details about the methodology see Yusupova A., 2016. "An Econometric Analysis of U.K. Regional Real Estate Markets".


Exuberance in Real House Price Index

The graphs below depict

  • The Regional Real House Price Index and a linear time trend. The sample starts in the first quarter of 1984
  • The statistic used to determine whether national real house prices are in an exuberant phase
  • The ratio of Real House Price to Real Personal Disposable Income. Dividing house prices by real disposable income is meant to ‘control’ house prices for factors that are conventionally viewed as anchoring the housing market over the long run.
  • The static used to determine whether the ratio of Real House Price to Real Personal Disposable Income is in an exuberant phase.

The shaded areas in the graphs below indicate identified periods of exuberance (i.e., the periods where the statistic is above the critical value).

The last time that Greater London real house prices were identified to be in an exuberant phase was the fourth quarter of 2007, while the last time that the ratio of London real house prices to London real personal disposable income was identified to be in an exuberant phase was the first quarter of 2007. However, it is interesting to note that the statistic had been increasing from the middle of 2014 to the end of 2015 and it was close to its critical value at the beginning of 2016, signalling prices could, at that point, move to an exuberant level. However, the slowdown in property price inflation in London and metropolitan areas over the last three quarters affected the corresponding exuberance indicators that are now farther away from the explosive threshold.

 

Real House Price Index

Real House Price Index

Backward Supremum Augmented Dickey Fuller (BSADF) Statistics and Critical Values

BSADF and Critical Values

 


Exuberance in the Price-to-Income Ratio

Ratio of Real House Price to Real Personal Disposable Income

Ratio of RHPI to RPDI

Backward Supremum Augmented Dickey Fuller (BSADF) Statistics and Critical Values

Ratio of RHPI to RPDI: BSADF and Critical Values

NOTE: Shaded areas indicate identified periods of exuberance (statistic is above the critical value). The BSADF series are reported for the lag length of one. The graphs for different lag lengths are available in the document Greater London.pdf. The series of BSADF and critical values are available for download in the Downloads section.

 

* Disclaimer

Although the Contents contained herein are provided under the highest professional standards in the generation of these forecasts, the UK Housing Observatory does not guarantee the accuracy or completeness of any information contained herein. The UK Housing Observatory specifically disclaims all warranties, expressed or implied, with respect to the use of this information or any results with respect thereto. In addition, the information contained herein shall in no way be construed to constitute a recommendation by the UK Housing Observatory with respect to the purchase or sale of any investment, security or its derivatives.