Average UK house price now Ł210,000

This figure means nothing! It’s just a headline. The way this figure is calculated is by taking all the properties values sold in the last month and divided by the number of properties sold in that month. This crude calculation is then banded about all the newspapers to make home owners feel good and non home owners feel bad. If the figure was less than last month’s then the opposite feelings would be felt for home owners and non home owners.

You have to segment property prices as much as you can. The detail I segment property prices are down to:

1. By district
2. By value

By district is easy since it is simply which district the property resides. If I think a district’s price is on the rise I then pile my money in to this district.

By value I segment in to 3 types:

i)                    Low Value - first time buyer, entry level properties. The cheapest properties on the market
ii)                  Mid Value – second time buyer properties in nicer private areas
iii)                High Value – detached or luxury flat properties
I go for type i) the Low Value properties as these are the ones that experience the highest capital growth, typically 100% in 3 to 4 years.

So once I have located the district that I am going to invest in I then home in on the low value properties. It is these prices I am interested in NOT the average house price in the UK. So currently I am investing in some areas in Scotland. I can tell you I know the prices in these areas on the low value stuff like the back of my hand. So when I see something come on to the market I know whether its cheap or a rip off.

So do I think prices are going up? Well yes, in the districts and types of properties I invest in. Do I think national house prices are going up? Well, I think I’ve shown you - its IRRELEVANT!

Ajay.

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