The Mortgage Clinic: 'Which house price index should we trust?'
Wednesday 20 August 2008
My partner and I are close to buying a property, but we're very confused by the various housing indices reporting different price falls – some say we're 10 per cent lower compared to last year yet others suggest between 6 and 8 per cent. One index suggested last week that prices in London had risen! Why is it so different? TT, Bath
One day rain, the next shine; then rain again. The house prices barometer will, as you've spotted, easily vary from week to week and succeed only in baffling buyers.
At the heart of the problem lie too many indices monitoring different stages of the sale process over various time periods, and a lack of proper explanation of each. Some look only at asking prices (Rightmove), the very earliest part of any transaction and so often an early indicator of trends, but prone to massive variations; others look at monthly mortgage approvals (Halifax and Nationwide) but across different parts of the country; yet more analyse actual sale completion prices (Land Registry), the most accurate but also slowest to emerge.
The index that suggested rising London prices was compiled by FT/Acadametrics from a variety of sources; it says prices rose by 4.6 per cent in the three months to July on an annual basis, helped by surging sales in Camden and Kensington.
"All the indices are valid and help to give some kind of perspective on what is happening in the marketplace generally," says David Hollingworth at broker London & Country. "However, when you are looking at individual properties it will always be impossible to apply a catch-all percentage drop (or rise) in value."
That's because the simple truth is that house prices vary on a street-by-street basis across the whole country; averages may be falling but some houses will still rise in value because buyers will always want them.
"Your best bet is to find out from local estate agents what you should be paying for property in your target area, and compare it to recent prices achieved by similar properties, and negotiate heavily with the vendor," advises Melanie Bien of broker Savills Private Finance. "As long as you plan to stay in the property for the long term you should be OK because prices will fall further before they start rising again."
Ray Boulger of broker John Charcol, thinks the Bank of England base rate – currently 5 per cent – could fall towards the end of the year and slide further next year. "Despite the shortage of finance, this will cause the market to bottom out in the first half of next year and so I don't think it is too early to buy, providing you drive a hard bargain; I'd aim to buy within the next six months."
Send us your questions and you could receive £50 to spend at Amazon
Foxed by jargon? Worried by the credit crunch? E-mail a question to email@example.com. We will not reveal your identity, and we cannot give specific advice. If your question is printed, you'll receive a £50 voucher from Amazon.co.uk, so you can kit out your home with anything from a lawnmower to an espresso machine. www.amazon.co.uk/homeandgarden
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Presents unwrapped, turkey gobbled... it's time to relax
Simon Read: There may be trouble ahead for cohabiting couples who don’t make a will
You'll need £220,000 for a minimum wage in your retirement
Money Insider: Would £150 make you switch banks?
Bargain Hunter: Find the deals that have real value beneath the Black Friday hype
Gold-plated pensions – the key to retirement freedom?
- 1 Jennifer Lawrence scores first UK top 40 single with Hunger Games track 'The Hanging Tree'
- 2 Shia LaBeouf claims he was raped during #IAMSORRY art installation performance
- 3 'You should come to my house and eat cheeses with me': 4-year-old sends adorable love letter to girl at school
- 4 Scientists predict green energy revolution after incredible new graphene discoveries
- 5 Michael Buerk wishes he killed Jimmy Savile when he had the chance - by pushing him overboard a cruise ship
Obama: The only people with the right to object to immigration are Native Americans
Ukip says babies born to immigrants in the UK should be classed as migrants – which would include Nigel Farage’s own children
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
Ukip mocked after mistaking Westminster Cathedral – for a mosque
Plebgate: Andrew Mitchell’s reputation in tatters as judge rules he used the word ‘pleb’
iJobs Money & Business
Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...
£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...
£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...
£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...
Day In a Page
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens