More on House Prices...

I found some more interesting data this morning courtesy of the ONS: The UK's Household Savings Ratio.

This is an indication of what proportion of people's monthly income they are saving. I thought it would be an eye-opener to plot it against house prices to see if there is any correlation. Now, the thing to bear in mind when doing this is to be cautious not to apply a causal link. House prices could have an effect on consumer saving, or consumer saving could have an effect on house prices. The data won't tell us which it is, simply that there may be a relationship between the two.


Once again, the blue and purple lines are data from Nationwide and Halifax respectively. The teal line (is that teal?) is the % of salary being saved by the average UK household. I know it's bad practice to do graphs without units, but it looks nicer that way and the actual figures aren't important - we're just looking at the relationship between the two.

In general, it appears that house prices and household savings are inversely correlated.

Once again, I will leave you to make your own mind up about what that means for house prices given that the average UK household has recently started increasing their savings ratio back to average levels...

Comments

  1. Witnessing this as we speak in Canada. where the realtors say 'Bubble' what bubble

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