Inflation outpaces house prices growth for just the 19th time since 1972

The latest research by specialist property lending experts, Octane Capital, has shown that despite the resilience of the UK property market, UK house prices are currently climbing at a lower rate than inflation for just the 19th year since 1972. 


Octane Capital analysed historic house price and inflation data stretching back 51 years, to reveal just how well the property market has performed on a long-term basis. 


The research shows that, on average, the rate of growth seen across the property market has outperformed the rate of inflation. In fact, house prices have increased by an average of 6.9% since 1972, versus an average annual rate of inflation of just 2.7%.


Out of the 51 years analysed, house prices have increased at a higher rate when compared to inflation in no less than 32 years. 


This property market performance was at its strongest in 1971, when house prices increased by 35%, +28% more than the rate of inflation (7.1%). In 2002, house prices outperformed inflation by +27.3%, with this difference also exceeding 20% in 1988 as well (+23.3%). 


The research also shows that so far in 2022, inflation has climbed at a higher rate than house prices, up by 8% between January and July of this year versus a 7.1% increase in property values. 


This is just the 19th year since 1972 that inflation has exceeded or matched the level of house price growth seen on an annual basis. 


However, this property market dip in performance remains some way away from the lows of 1975, when inflation climbed 24.2% in a single year, +17.4% higher than the average rate of house price growth (6.9%). 


While inflation only increased by 3.5% in 2008, the property market crash led to a 13.4% dip in house prices, meaning the gap between growth in inflation and property values also sat at -16.9%. 

CEO of Octane Capital, Jonathan Samuels, commented:


“The UK property market has enjoyed an extremely prolonged period of positive growth and has continued to stand firm in the face of economic uncertainty and the farcical display that has played out in Westminster in recent weeks. 

There’s generally no safer place to put your money than UK property and the strength of this avenue of investment is clear, with house prices outperforming inflation in 32 of the last 51 years. 


But despite the resilience shown in 2022, the cost of living crisis has driven inflation to a forty year high, exceeding the current rate of house price growth. This is, of course, bad news for homeowners, with things certainly set to get worse before they get any better. 

However, the cyclical nature of the market has proven that historically, any property market downturn will inevitably be reversed as market confidence returns.”


Data tables

Data tables and sources can be viewed online, here.