Predicting UK House Prices Through Stocks Tied to the Housing Market

ABSTRACT Tracking house prices is crucial for identifying risks to the banking sector and overall financial stability, making accurate predictions essential. This study examines whether housing‐related stock returns can predict house price fluctuations in the United Kingdom. Using monthly data from 1983 to 2023, empirical evidence suggests that these equity returns strongly predict UK house price changes 1 month ahead. Because housing‐related stock prices provide reliable and easily accessible forecasts of housing market trends, the findings offer valuable insights for investors and policymakers.