The house price indices have contradicted themselves this month.
Halifax said they went up, but Nationwide and the Royal Institution of Chartered Surveyors both reckon they fell.
Even when they agree, there are often quite wide differences in the figures they quote for house price growth, or even the average house price.
Is it worth listening to any of them?
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8Hi Jon,
Firstly, they need something to say don't they its a great story to tell even if true / not true.
If they say "house prices are falling" it could generate a surge in properties being put on the market for sale and, vice versa, prospective buyers actually committing to a purchase because its suddenly a great investment. In other words it stimulates the market.
Either way this is a smart move by the banks its a win win.
The seller is rushed into a sale BEFORE THE MARKET CRASHES = more lending. My wife who has expressed an interest in moving house recently said to me last night "The housing market is about to crash" in a state of panic. My response went like this "And spurs will win the league this year love" I then carried on making a cuppa.
The buyer on the other hand doesn't have to borrow as much on a mortgage to secure a property because the prices are apparently falling. Therefore the chance of the bank losing money if the customer defaults on payments is significantly reduced.
Next stop Dragons Den.
Posted on 11 August 2010 |
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5It'd be interesting to see a set of averages calculated from all the different sources.
Posted on 11 August 2010 | Love 4 loves
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1RICS surveys are generally based on surveys of their members opinions, not data. And given how some of their members overinflated house valuations a few years ago, I treat anything they say with a pinch of salt. Halifax used to be so dominant in the mortgage market, that they held all the data. But that isn't the case any more. Nationwide generaly talk common sense and their conclusions appear to be backed up by decent statistical analysis.
Back to the obvious basics though, a house is worth what somebody is willing to pay for it. People aren't mugs, but are highly influenced by estate agents. Estate agents do not have a robust logical way to value houses. Estate agents have a incentive to overvalue houses to benefit their customers. Surveyors are more than happy to rubber stamp estate agents valuations.
There's no reason Bank's couldn't value houses themselves using statistical and financial models. Zoopla is doing this now. Hopefully not long before property pricing gets into the 20th century!
Posted on 05 November 2010 | Love 0 loves
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4It's stupid to look at a single months figures in isolation.
As ever with statistics, given the variability of the data - the house type mix in this case - the most reliable survey is the one with the largest data set; the Land Registry figures.
For predicting house price movements, the Bank of Englands mortgage approval figures have a high correlation to the subsequent change in prices.
Posted on 21 March 2011 | Love 0 loves
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0Thats a good question Jon !
Since these indexes are made up by interested parties (banks, surveyors, estate agents) they are certainly NOT impartial ! Basically they are just propaganda. As you point out many homes have 2 or more incomes, but is that not just because money is worth less and less due to government created inflation ? Eg. previously train fares were half the cost of now, family railcards got you a further half off, the wife was a pound as were the kids, etc. now due to rail privatisation many people are forced to drive, and pay extortionate parking fees, too ! So money is worth less and everyone works more, does that mean a home is worth more too ? Something has to give, as the government has no plan, no industrial strategy. They are just blaming the poorest for their failure. This is very sad in such a previously GREAT country ! So my answer is no, do not trust ANY house price index. Buy if it is right for you and YOU have a plan as to how to repay the mortgage or improve the home, or rent it out, etc. and only buy if you really LOVE the house and the neighbourhood ! Then you will be fine !
Cheers !
P.S. If your neighbourhood all votes GREEN then you stop the traffic by creating cul- De- sacs then your home will be worth more, as any good estate agent will tell you that homes are worth a lot more on a SAFE cul - de - sac compared to being on a road.
Posted on 07 February 2012 | Love 0 loves
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