At the end of the third quarter of 2007, the average UK house price (according to the Halifax House Price Index) stood at £199,766. By the end of the third quarter of 2011, that had dropped to just £162,211 a nominal fall of 18.8% over 4 years. However, UK house prices have dropped by more than that in real terms, when adjusted to take inflation into account.

The Retail Price Index was 208.0 in September 2007, rising to 237.9 in September 2011  (Source: Office of National Statistics – ‘RPI: All items: 1947-2011’ – where January 1987 = 100). That is an increase of 14.4% in the 4 year period. So, if real (inflation-adjusted) house prices had stayed level, an average £199,766 house in Q3 2007 would cost £199,766 + 14.4% today, that is to say £228,532. The fact that it costs £162,211 shows that real house prices have dropped by 29% from 2007 to 2011.

This shows just what good value residential property has become since 2007. Despite the uncertainty surrounding the world economy and the stability of the eurozone, is it time to take advantage of an almost 30% correction in average UK house prices?