House Prices Track Record

Here we have the S&P/Case-Shiller Composite-20 U.S. home price index and the U.K. house price index published by Nationwide. We wrote the WhichWayHomes "Essentials" at the end of 2006 in order to explain that real estate was in a bubble and that a correction in house prices was likely as credit dried up. WhichWayHomes.com was launched a few months later in April 2007.

Since their peak, U.S. house prices have acted in line with expectations, falling around 30% from the top. Despite being subject to the same deteriorating fundamentals as the U.S, house prices in the U.K. have been artificially buoyed by over-optimistic homebuyers and investors. A new wave of mortgage resets will hit the market between 2010-2012, pressuring house prices in a similar way to that experienced during the sub-prime crisis. Furthermore, the impact of a weak commercial real estate sector will start to ripple through the economy over the next two years, draining banks and weighing on the real estate market. We do not believe the time has yet come to buy property.