Why guessing the market is a mug’s game

editorial image

CONFLICTING reports about the rise and fall of house prices can get confusing.

Jon Handford, managing director of Newman Property Services in Rugby, tries to understand reports regarding the current state of the UK housing market.

But he believes many of the figures quoted are misleading.

He said: “I find it quite amusing that so many people believe that they can accurately predict the housing market.

“I have said for some time that this is more or less impossible.

“Supporting this theory is a baffling report by the Government showing that its own official statisticians are completely at odds over the direction of the housing market and are working to entirely different figures.

“The Communities and Local Government (CLG) data showed that in March UK house prices increased by 0.9% over the year and by 1.2% over the month. The CLG report put the average UK house price at £205,565 in March.”

He said the report is at total odds with the other official report into house prices, released by the Land Registry.

“Just two weeks ago, on May 4, the Land Registry reported that house prices in March fell by 1.1% in the month, and by 2.3% over the year,” Jon added.

“The Land Registry – reporting for England and Wales, rather than for the whole of the UK – put the average house price in March at £160,996.

“However, the fact that the Land Registry reported house prices for only England and Wales should – according to the CLG report – have actually boosted the Land Registry findings.

“According to the CLG report, average house prices increased during the year, March 2010 to March 2011, in England (1.3%) but decreased in Scotland (-0.7%), Wales (-2.5%) and Northern Ireland (-13.9%).”

Jon added: “If the government are struggling to measure what has happened in the market it is unlikely that anyone else has the capacity to accurately predict what is going to happen moving forward.”

He said if you want a true picture of how the market has affected your property then speak to a local specialist.

“Without getting into a deep discussion, there are conflicting figures on house prices because everyone uses different methods and figures from different sources to calculate house prices,” added Jon.

“Some use mortgage lending which doesn’t include cash buyers; some use actual sale prices from The Land Registry; Rightmove are using asking prices.I don’t know how GLC calculate their figures but they are probably ‘accurate’ based on the way they calculate it.”

Jon said: “In my own personal experience there are four tiers to any housing market - international, national, regional and then local markets.We have seen huge variations in results in neighbouring towns, let alone neighbouring counties. Just because there is a shift in prices nationally it doesn’t mean that the same is happening in your area,” Jon added.