What is in a house price?

Anyone in any doubt that the British are in fact obsessed with property prices need only look at this week's news coverage of the RICS announcement that house prices in March had basically stayed just about the same as the month before when there wasn't much to talk about either.

I have taken issue with the RICS reports before so I won't go there again. What I will say is this. Any talk of national house price is nonsense. There I said it.

You see the asking price of Mr Jones home three bed bungalow in Cumbernauld Street in Sunderland has no bearing whatsoever on the value of Lady Huntington-Smyths six bed townhouse in Belgravia.

Now I am no hedge fund manager but I do understand the simple logic of supply and demand and how if one outstrips the other prices will go up or down.

I also know this. Thanks to the recession / bankers / Brown (whoever you want to blame) getting a mortgage has been pretty tricky over the past few years. Lots of people have wanted to move but couldn't get a mortgage.

Supply is getting better now and so is the market in general. Lending is picking up. Not enough though and herein lies the problem.

Several years ago (2007 to be exact) some terribly clever people in some Think Tank did some terribly complicated sums that estimated the rate at which our population was growing combined with lifestyle habits and realised that in order to house everyone living in Britain in 2020 we would need a whopping 3million new homes.

No sooner had they completed their formula than the banks owned up to lending out a whole heap of money they didn't actually have and the rest as they say is history.

Quite simply our industry hasn't been able to build homes at the rate we would like and at the rate required to meet demand and we are now staring at the worst housing shortage crisis in Britain since World War II.

So if you really want to know what your houses is worth don't believe everything you read in the papers.  Think long term and ask yourself this: if there aren't enough homes how much will someone actually be prepared to pay for yours in a few years? And that my friends is why housing is and always will be the soundest long term financial investment you can ever make.

Sue Warwick - National Sales & Marketing Director Miller Homes