Nothing divides opinion quite like house prices. Ask 10 people for their views and you’ll get 10 different answers with as many predicting valuations are set to rocket over the coming months as warning that another dramatic slump is on the way.
It can often be a similar story with property-market data. There’s certainly no shortage of surveys, statistics and predictions being produced every month, but these can often provide contrasting views which can end up adding to the confusion.
The main problem is that there are so many ways to both measure and interpret house-price data that it’s easy to come to quite different conclusions when you’re analysing the same period of time, according to Justin Modray, founder of website Candid Money.
“The data might cover different parts of the country, be based on only a sample of property sales, or adjusted to take seasonal changes into account,” he explains. “It also tends to reflect price changes in mainstream properties within towns and cities so is less relevant for villages and unusual homes.”
The length of time it takes to sell a property and the outcome of the negotiations involved can also dramatically skew the figures, according to Kate Faulkner, author of the Which? Property Investor’s Handbook and founder of website Designs on Property (www. designsonproperty.co.uk).
“A property might take six months to sell and see its value change five times in that period,” she explains. “It could be on the market at £265,000, have an offer accepted of £255,000, and the lender revaluing it at £249,000 before finally being recorded by the Land Registry for £245,000.”
So where does that leave you? Is there any point looking at this information? What providers can you trust and how should you use their data? Should you pay attention to the official house sales figures or focus on studies which reflect what’s happening on the ground?
Let’s start with the main sources of information – and what they can tell you.
This is the government agency created in 1862 to register the ownership of land and property in England and Wales. You can use its website (www.landregistry.gov.uk) to see how much the house you are looking to buy, as well as those nearby, has sold for in the past.
As well as keeping more than 23 million titles – which is the evidence of ownership – it also produces a monthly House Price Index (HPI) using completed sales data. The most recent figures, up to March 2013, reveal prices are up by 0.1 per cent on February and 0.9 per cent over the past year. This is enough to push up the average property value in England and Wales to £161,793, while the data also reveals that repossession volumes decreased by 18 per cent in January 2013 to 1,317 compared with 1,602 in January 2012.
Not only has London enjoyed the biggest increase in its average property value over the past 12 months with an uptick of 9.6 per cent according to the figures, it also experienced the greatest monthly rise with a movement of 2.5 per cent.
The North-east suffered the biggest annual price falls with a decrease of 5.5 per cent, while the North-west had the largest monthly drop of 2.5 per cent. The number of properties sold for more than £1m, meanwhile, rose 28 per cent to 610 in January 2013 from 476 in January 2012.
Hometrack (www.hometrack.co.uk) is a privately owned property analytics business which provides data that’s used to inform mortgage lending, capital-market investment, asset management and regulation. Its customers include lenders, mortgage brokers, house builders and investors.
Each month it also produces a sentiment survey that gives a flavour of what is happening across the entire property market. This has been going for the past decade and is based on answers given to a standard questionnaire by estate agents and surveyors across England and Wales.
The study picks up on exactly what’s going on within agents’ offices, according to Richard Donnell, Hometrack’s director of research, and covers areas such as the length of time taken to sell, what percentage of the asking price is achieved, and how many buyers are walking through the door.
“We are surveying around 1,200 on the ground that have properties they are trying to sell and are dealing with people walking through the door that have different reasons for buying or not buying,” he explains. “It is all about picking up on those sentiments.”
Its latest report suggests house prices gained 0.3 per cent in April as well as improved market sentiment and a lack of supply for sale. The real driver, however, has been London where demand has grown three times faster than supply over the last quarter.
Rightmove (www.rightmove.co.uk) is a property website that claims to list around 90 per cent of all properties for sale or rent – which equates to more than one million properties. It receives over 30 million visits every month and is used by all eight corporate estate agents with 100-plus branches.
It bases its house-price index around a monthly sample of residential property asking prices as they come on the market via Rightmove’s member estate agents over the previous month, and does not seasonally adjust any of the figures.
New-seller asking prices are up 2.1 per cent (or £4,996) to £244,706 – the fourth-successive monthly rise this year, according to its April 2013 figures. This is now just £1,529 off the £246,235 record asking price that was achieved in June 2012.
The research also indicates a narrowing of the average gap between the last advertised asking price on Rightmove and the sold price recorded with the Land Registry. Last December this figure stood at 3.39 per cent but it has since gone down to 2.95 per cent.
This indicates that sellers are negotiating less and buyers are willing or able to pay more, according to Miles Shipside, Rightmove’s director and housing-market analyst. “While the discount from the asking price on an individual property is very much a product of how realistic that price was, it is a sign of a recovering market if they are paying closer to what sellers ask,” he says.
Two often-quoted surveys are produced by the Nationwide and Halifax. Both of these base their studies on their own mortgage-lending data. The most recent versions – which came out at the beginning of May 2013 – give differing interpretations of the market.
While the Halifax suggested that prices have increased 1.1 per cent over the past month, the Nationwide reckons they have fallen 0.1 per cent. The Halifax also suggests values have gone up 2 per cent over the past year, while the Nationwide puts the rise at 0.9 per cent.
However, both virtually agree on the price of the typical UK home is around the £166,000 mark.
The key is to find data as local and specific to your property as possible, according to Ms Faulkner. So if you are after a three-bedroom semi-detached, look at what similar houses have changed hands for in the same area.
“Look to see how many boards are ‘sold’ versus ‘for sale’ in your area,” she adds. “If four or more out of 10 are sold it’s a pretty good market, but if there’s only one or two it’s slow. You should also look at how long properties generally take to sell.”
Dr Sandi Mann, co-author of Upping Sticks, advises buyers to carry out their own research rather than relying on data. “You can’t beat speaking to neighbours and digging around,” she says. “Everything can look perfect on paper but you can’t get the human element from these sources.”
Establishing what facilities are nearby, whether there are plans in place for improving the neighbourhood, if the crime rates are high, and what noise levels are like at the weekend are some of the important information that can be gleaned in this way.
“The estate agents should be regarded as just another source of information and you need to get as much as you can,” she adds. “Take anything that is said by someone who has a vested interest with a pinch of salt – and al-ways double check everything you are told.”
The fact is that although these sources of data are useful as a general gauge of the market they should not be relied upon completely, according to Mr Modray.
The bottom line is that a property is worth as much as someone is willing to pay for it.
“If you’re looking to buy a nice home in a village where properties seldom come on the market, the chances are you’ll face competition and end up paying top whack,” he says.
“By contrast, properties in an unfashionable part of town where there’s plenty on sale could prove difficult to shift, so sellers may accept a low offer. In both cases, average house price data means very little.”Reuse content