Introduction

For about two thirds of the last 40 years investing in housing using a mortgage has given returns better, and often far better, than putting cash into a building society account, let alone National Savings or a bank.

Individuals willing and able to relocate at the right time have done even better. Not for nothing did around 50,000 more individuals a year leave the South East than entered it in 1987 and 1988 to relocate to cheaper housing in other regions. Many locked in their capital gains and avoided the most serious price declines of the early 1990s.

This continues to be a volatile market and mistakes can have devastating consequences. Half a million homes have been repossessed since the late 1980s when the previous house price boom came to an end. Many of these cases would not have occurred if borrowers and lenders had been better informed.

Yet the housing market is notorious for poorly informed or biased comment spread through the free property newspapers and other media. Forecasts in 1990 that UK house prices would rise 40% in the next 5 years (they actually fell by about 10%) were far from untypical.

At the other extreme, one major mortgage lender has been forced by events to revise up its UK house price forecast 4 times in the last 15 months to match the 16% rise recorded in the market between February 1999 and 2000. It is hard to excuse this on the basis that there has been a dramatic improvement in the economic environment, though clearly some upward revisions in economic growth have occurred.

We would be the last to claim that perfect forecasts can be made. However, good economic analysis backed by the depth of research we have behind us, should enable this website to make a contribution to public understanding, particularly of potential risks in the market.

This website is intended for three audiences:

The first is typical home buyers who may be in the market for the first time or thinking of moving up or down-market, or of a regional relocation, or switching to the rental sector.

The second consists of active participants on the other side of the market such as estate agents, mortgage lenders and house builders.

The third consists of professionals, typically with some economic training who feel at ease with the terminology of economics and can work with econometric models. Students, whether doing A-level Economics or Economics degrees at University can slot themselves in at the level of expertise they find appropriate, and will surely find useful material.

The site may even prove useful to government economists and policy makers. We believe that policy mistakes made in the past are currently being repeated and it seems useful to make both voters and policy makers more aware of the issues.

In the next months, more material will be added to the site. We expect to have monthly updates on the UK housing market situation, quarterly updates on regional housing markets and quarterly articles examining a particular issue such as the quality and interpretation of the different house price data sources, fluctuations in mortgage arrears and repossessions, trends in credit availability, trends in the regional economies, the link between housing market conditions and prospects for adopting the Euro.

We hope that you'll enjoy the site, tell others about it, and let us know your views!