When is a house price index not accurate? The answer, it would seem, is when the market is in freefall.
Look in the papers and you will find a stream of information about house prices from a plethora of sources including the Halifax, Royal Chartered Institute of Surveyors, Land Registry, Rightmove, Nationwide, Hometrack and the Financial Times.
All claim (or are quoted as claiming) showing which way house prices are heading every month and during the property boom we all stood by, our glasses charged with champagne, applauding the extraordinary rises recorded by these respected property names. And as long as they showed prices going up, most of us (including property journalists) were happy to agree heartily with them.
But with the exception of the Land Registry, which records prices paid for property on completion, all of them are flawed in one way or another. Some ask agents or surveyors how sales are fairing in or how they are feeling about the market (RICs and Hometrack), whereas the others merely record asking prices.
But are any of these a good way to refection of property prices? I would say not and now that prices are falling at a very fast rate none of them really agree. Here some examples from recent stories I’ve run; all annual figures – ‘Poll of polls’ by agent Chesterton/Humberts (-15.3%); Rightmove (-9.1%); Halilfax (-17.5%); Dept Communities and Local Government (-11.5%) Nationwide (-17.6%) and Land Registry (-15.1%).
So what would you suggest we do, I hear you ask.
The answer is that there is no such thing as a national house price survey. Property markets are by definition ‘local’ and at best regional. While one postcode witnesses a 5% drop, its posher neighbour might register a 5% hike.
National indexes can only indicate very general trends – up, static or down. Anything else just gives us all pointlessly sleepless nights. But for the moment they are the only figures available – and until a way of reporting local, street-by-street figures I’m afraid it will be the same-old, same-old.
