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My forecast for 2015 - Fewer house price indices


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Sorry about this, but for the next few weeks I'm going to be rather hypocritical on the subject of house price forecasts and indices. 

What's new, you might ask? Surely Journalist+Hypocrisy=Business As Usual.

OK, you may have a point. But we are all - journalists and agents alike - rather hypocritical when it comes to house price indices.

On the one hand, agents are quite right to say that vendors take too much notice of high-level house price indices. 

Inevitably this is when a seller expects the value of their own home to reflect the most optimistic figure he or she cherry-picks from a story about average national house prices. Equally inevitably, the index he or she chooses is hopelessly general with little direct application to that vendor's location or property type.

I happen to agree with this view of vendors taking too much notice of snapshot indices. I try - most of the time anyway - to make it clear in stories that such indices are governed by averages and based on large geographical areas. Quite often I add that nothing is likely to be more accurate than a good agent working in that area.

But on the other hand, just who generates most of these house price indices and forecasts anyway? That's right - agents.

It used to be just the Halifax and Nationwide mortgage lenders: forget whether they were right or wrong, good or bad. At least until the Millennium there were only those two indices, topped up with occasional much-delayed data from the Land Registry.

Now every agent with a good PR person - and every agent with a rather poor PR person, too - generates yet another 'house price index' at the drop of a percentage point.

These are the main agents providing market data and indices: LSL (lots of different indices from LSL, actually), Connells, Haart, the NAEA, ARLA, Savills, CBRE, Knight Frank, Rettie & Co., JLL, Douglas & Gordon, Chestertons, W A Ellis.....that's an exhausting but not remotely exhaustive list. 

And there are yet more indices, albeit not all directly from agents.

Remember Agency Express' and Rightmove's indices, and Zoopla's, eMoov's and Move with Us' ad hoc price analyses, plus those 'official' figures - the ONS, HMRC and Land Registry. 

And somewhere, squeezed in, the Halifax and Nationwide are still rolling along. 

Now, you probably get my point.

There are lots of indices and figures about the market, and although they make interesting copy they are all, arguably, misleading or at least inadequate when it comes to being directly applicable to one vendor selling one home at one time. 

So forgive my special pleading but let's not have a pop at journalists for giving these indices publicity, when many of them come from the agents themselves. 

However, there may just be a twinkle of light at the end of this particular tunnel. 

Some agents are taking a more sophisticated and nuanced approach to producing market analyses. 

At the high end, Strutt & Parker produces only occasional research and it tends to be imaginatively constructed - the most recent, for example, looked at different households and their different housing needs at different times of life.

Hamptons International, too, has started a new and more considered index called Ability To Buy: it looks at how affordable housing is, not just in terms of property prices but after buyers or renters pay essential household bills, too. (Within 48 hours of being released, this index received sharp criticism from the doom-mongers at Moneyweek, which means it's pretty good in my book). 

Now Hometrack, using agents' data at all levels of the market, has abandoned it old house price index and is instead looking at 20 cities - it will still be high level, but more applicable to many individual agents and vendors than previous indices. 

My guess is that more agents will follow the lead of Strutts, Hamptons and Hometrack and give diminishing prominence to calculating - yet again - the average house price across all of the UK to at least one decimal point, or the latest (often rather gloating) data on prime central London's stellar market.

So why, after all that, am I apologetic at my upcoming hypocrisy?

Well, it's that season when journalists love reporting house price forecasts for the year ahead. 

And if there's one thing likely to be even less accurate than a snapshot of house prices and rents across the whole country right now, it's a forecast of what house prices and rents will be doing across the whole country in a year's time.

Yet that's what I'll be reporting on EAT, LAT and anything else I write for. 

So I'm sorry - I know it'll be interesting but, to be honest, it won't necessarily be accurate.

Oh, and one final thing. Remember that most of those forecasts will be produced by agents....

*Editor of Estate Agent Today and Letting Agent Today, Graham can be found tweeting about all things property @PropertyJourn

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