General inflation measures the price of goods and services bought by UK households. Typically, this means things like food and clothes. There are several ways to measure general inflation in the UK. The Consumer Price Index (CPI) is one of the most common and is published by the Office for National Statistics every month.
General inflation
People’s confidence levels in their individual financial position can be affected by general inflation. And this in turn can impact the demand to buy a home. However, inflation increasing or decreasing doesn’t necessarily mean that house prices will follow the same trend. This is because house prices can be affected by a number of related factors.
Supply and demand
Supply and demand is one of the key factors that affects house prices. It describes the level of demand there is for properties, compared with the supply, or number of homes there are available to buy.
Other reasons
House prices can also be affected by how easy it is to borrow money, as well as incentives from the government.
Over the past 20 years asking prices of homes across Great Britain have more than doubled, from just over £150,000 to around £360,000. This means that house price inflation has outpaced both general inflation and average salaries over the same period.
