Tier 1 Indicators: Core Drivers of House Prices
House Price Indices (Halifax, Nationwide and UK HPI)
Monthly indices tracking changes in average UK house prices based on mortgage approvals.
Impact
These indices confirm whether prices are rising or falling. Sustained declines validate market corrections, while rising indices confirm renewed momentum.
Data: Halifax HPI | Nationwide HPI | UK HPI
RICS House Price Balance
A survey-based indicator showing whether surveyors report more price rises or falls.
Impact
Often leads official house price data. Sharp deteriorations tend to precede falling prices, while recoveries can signal stabilisation before prices rise.
Data: RICS UK Residential Market Survey
Mortgage Rates
Measures the interest rate households actually pay on new mortgage lending.
Impact
One of the most powerful drivers of house prices. Higher rates reduce affordability and demand almost immediately; lower rates increase borrowing capacity.
Data: UK Finance / BBA
Average Earnings
Tracks wage growth across the economy.
Impact
Sustained wage growth allows buyers to service larger mortgages, supporting higher prices over the long term.
Data:
ONS AWE
Series: KAC3, KAC2
CPI & Core CPI Inflation
Measures consumer price inflation and underlying price pressures.
Impact
High inflation pushes interest rates higher, weakening housing demand and reducing real house price growth.
Data:
ONS Inflation
Series: D7BT, D7G7
Tier 2 Indicators: Demand & Affordability Context
Unemployment & Employment Change
Measures labour market strength and job security.
Impact
Rising unemployment weakens demand and increases forced sales risk. Strong employment helps stabilise prices during downturns.
Data:
ONS Labour Market
Series: MGSX, MGRZ
HMRC Payrolls
Near real-time data on paid employment.
Impact
Provides early warning of labour market turning points that may later feed into housing demand.
Data: ONS Payrolls
GfK Consumer Confidence
Measures household sentiment toward finances and the wider economy.
Impact
Weak confidence delays buying decisions and slows price growth, even when employment remains stable.
Data: GfK Consumer Confidence
Tier 3 Indicators: Supply & Long-Term Structure
Construction PMI
A survey measuring activity in the construction sector.
Impact
Weak construction activity constrains future housing supply, supporting prices over time but with little short-term effect.
Data: S&P Global PMI
Construction Orders & Output
Measures the volume of housing-related construction work.
Impact
Influences housing supply over multiple years. Persistent undersupply can amplify price rises during demand booms.
Data: ONS Construction
Key Takeaways
- Mortgage rates and wages dominate house price movements.
- Labour market data shapes demand and resilience.
- Survey indicators lead; official prices confirm.
- Supply constraints matter most over long horizons.