House prices are just about static as the alleged slowdown increases according to Hometrack – but this claim contradicted by the Nationwide. How can this be?
Hometrack reports says prices rose just 0.1 per cent for the second month running with London virtually flat-lining with just 11% of London postcodes showing month on month price increases. This compares to prices rising across 19% outside London.
Hometrack says the change of fortunes for the London market over the last six months has been stark. (We call it ‘natural adjustment’)
Figures for August are also notoriously unreliable due to holidays. That said, at Northwood, we have recorded our best month ever for new instructions, sales and more importantly, exchange of contracts which are nearly 30% up on July with a day to go.
Another contradiction comes from the Nationwide which recorded that prices moved up by an average of 0.8 per cent in August. This represents the 16th successive month that growth has been recorded and more importantly, house price growth annually is rising at 11% a year, an increase of 0.4% from July.
So, who is right? Well, there are lies, damn lies and statistics. Comparisons are actually very difficult to make month on month. Firstly, in most traditional price indices, the same goods or products are priced in each period as with the Governments ‘shopping basket’ to measure the Consumer Price Index. However, house price indices depend on prices collected from sales or valuations, and it is impossible for the exact same properties to be sold in consecutive periods so we aren’t comparing eggs with eggs. Even identical houses on the same estate will have different standards of finish, condition etc.
Secondly, when was the price actually fixed? HM Land Registry record data once the title is registered. Halifax & Nationwide record prices based upon mortgage approvals and even they rarely agree due to geographical market share. In truth, the point of sale in terms of value is generally when the offer is accepted, often 3 months earlier.
Lastly, single figures may give a national picture, but are of little relevance to a seller or buyer. Averages are rarely indicative of the extremes they represent for example; one area goes up 10% and another drops 10%, then the average of 0% tells us nothing about either area.
Trends are useful to see how the economy is recovering but unhelpful locally. Hometrack may be correct about London as a whole, but what happens in Acton may be a world away from what happens in Clapham. Where I live you can’t find a house for love nor money. A close friend has just put her house on the market for £30k more than the price achieved by her neighbour just 3 weeks ago. I cheekily asked if she had oil reserves or mining rights in the back garden. Her reply “I have had 3 offers close to the asking price and we have 6 viewings on Saturday – and I thought you were an expert.”
In summary, if you want to know what prices are doing in your road – ask your local agent – preferably us!
Eric Walker – MD