Inflation is defined as the increase in the price of goods and services in a particular economy over a period of time. As it relates to the housing market, inflation can drive up house prices and lead to many potential buyers being priced out of buying a property.
It goes without saying that UK house prices have increased significantly in the post-war period. In fact, figures from Nationwide show that, in 1952, the average home cost just £1891.
Compare that to Rightmove House Price Index early 2011 figures which suggest that the average UK home asking price is £230,030 and it isn't difficult to see how much house prices have inflated in the intervening 59 years. Essentially, a house in modern Britain costs roughly 121 times as much as it did in the early 1950s.

The causes of house prices inflation

What factors are involved in pushing up house prices, then? There are numerous arguments involved, but one of the simplest explanations involves the economic principle of supply and demand. When there's increased demand for or reduced supply of homes, house prices will go up.
In recent history, housing demand has been very strong - especially during the nineties and early noughties. This, of course, changed when the credit crunch hit.
Meanwhile, shortage of supply has long been a problem in the UK housing market, especially in popular areas. Consequently, this means that only a very slight increase in demand can cause a proportionally significant rise in house prices.

Keep up-to-date on house prices inflation with Rightmove

Monitoring changes in the UK house prices market on both a month-on-month and year-on-year basis, the Rightmove House Price Index is formulated using the largest and most up-to-date sample of property asking prices in the UK.
As such, it paints a comprehensive picture of the current state of the property market in this country and should be your first port of call for the latest house prices and rate of inflation information.

House prices articles