One upbeat housing survey is not a recovery
Nationwide's report is just one of many indicators
Sunday 31 May 2009
Our troubles are over – a house price survey from Nationwide has found that property prices have gone up by 1.2 per cent in a month, a rise in two of the last three months. Suddenly, the lender says, the annual rate of decline as improved dramatically from -15 per cent to -11.3 per cent, so that the average home is worth over £2,000 more than it was four weeks ago. The talk is now of having found the bottom of the housing slump.
Well, that wasn't too bad after all. Roll on a soaring market and economic prosperity. Where's that credit card application gone?
But hang on, one stat does not a recovery make, especially in this industry, and a totally different report created from totally different numbers due out tomorrow is expected to show no change at all. So why the wildly varying results?
This year's property sales volumes are half what they are in a normal year and the market is so small that any change is going to show up as a huge fluctuation. Even Nationwide's own boffin said: "It is still too early to say that the market is turning definitively. During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods."
It's important to note that each of these surveys is based on that single lender's numbers – just the properties on their own books – not the entire country. If we're not careful, we may be pinning our hopes of a recovery on the fact that someone has managed to shift their three-bed semi in Huddersfield.
Then there's the small problem that each survey measures different things, and woe betide you if you assumed that they were about the prices UK houses sell for. The Nationwide's monthly figures are based on their "lending data for properties at the post-survey approval stage" in the UK. Halifax gets its numbers in the same way, so comparing these two reports may be a good start as together they cover a sizeable chunk of the UK's mortgage market. That's approvals, mind. But the stats released by the Department for Communities and Local Government looks at mortgage completions, not all the mortgages approved.
At this stage, it all gets really sketchy. RICS – the Royal Institution of Chartered Surveyors – is quite a heavyweight, and its survey is the one the Bank of England considers when it decides interest rates. But its method is an odd one, drawing its conclusions by comparing the number of chartered surveyors who reported a rise in new buyer inquiries in any given month to the number who reported a fall. And Rightmove's numbers are even more fluffy, based on a monthly sample of the asking prices of the properties on its website, but only those in England and Wales.
Oh, and when any of them talk about "the greatest increase – or decrease – on record" bear in mind those records all started in different, and surprisingly recent, years. RICS has the longest running statistics, and they only go back to 1978.
Clearly trying to glean real meaning from a single lender's figures is like panning for gold in custard. It may all look promising but there's little of intrinsic value to get a grip on.
And if you are trying to pin down the price that your home will settle at, let's not forget that repossessions are on the up and unemployment will continue to rise, with a negative knock on effect that is yet to be felt in our bricks and mortar.
That said, if you really must have a positive spin, another chief economist – Simon Ward at Henderson Global Investors – is talking of the bottom of the trough, arguing that forced sales may not be as widespread as we once feared because of the historically low cost of borrowing.
"A key difference from prior busts is the low level of mortgage interest rates, which is allowing many struggling borrowers to continue to service their loans," he says. "The Council of Mortgage Lenders reported last week that repossessions and arrears cases rose by less than feared in the first quarter. The CML intends to revise down its earlier forecast of 75,000 repossessions in 2009. With less distressed selling, downward pressure on prices from rising supply is much less than in prior downturns. According to RICS, the number of unsold homes on the books of the average estate agent stood at 69 in April – far below peaks of 166 and 196 in the last two major housing downturns. Meanwhile, buyer inquiries have picked up recently."
Hold your nerve, ladies and gents, hold your nerve.
The FTSE 100 is inching closer to its record high but can it maintain these levels?
MPs call for Equitable Life policyholders to be paid £2.8bn owed by government
Fuel poverty could claim 100,000 lives over next 15 years, warns energy charity
Bank-beating exchange rates on your international payments
Weekly Money: Round-up of the personal finance stories you may have missed 23-27 February
- 1 The black and blue dress: Makers considering a white and gold version
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
Oscars 2015: Birdman beats Boyhood as Eddie Redmayne and Patricia Arquette win big - as it happened
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
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
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