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I don’t know whether you have noticed, but everyday there seem to be yet another set of definitive house price figures. Who produces them and which one of them is right? Here’s a quick review of the most widely used sources: Land Registry (see below for link) Each property sale in England and Wales is recorded at the Land Registry along with the sale price. Data is available for average house prices right down to postcode areas. The figures are separated into house types e.g. detached, semi, terraced and flats and the number of transactions during the period is also given. The main drawback with these stats are that they are only published every quarter and therefore they are not useful in identifying emerging trends. ODPM (see below for link) For the uninitiated ODPM is the Office of the Deputy Prime Minister. The stats were bought out in 2003 and are based on completion prices and collected from around 50 mortgage lenders. They do therefore exclude approximately 25% of the market that is accounted for by cash purchases. These figures are ‘mix adjusted’ which involves a technique of ‘merging’ the details of individual houses in order to come up with a ‘typical’ house. This averaging is employed to ‘flatten out’ the differences that might occur as a result of differential sales in types of house from month to month. Figures are produced every month. Nationwide and Halifax (see below for link) The two biggest mortgage lenders also produce monthly figures. These figures are based on mortgage approvals, which is not always the same as the ultimate purchase price. The figures are interesting in that they predict trends in sales before they have completed. Like the ODPM figures they are ‘mix adjusted’ and are in addition ‘seasonally –adjusted’ too. Whilst very similar, there are subtle differences in their methodology. Off course neither will be a perfect reflection as in each case the figures only relate to mortgage approvals by these specific companies which are significant numbers but only a proportion of the total mortgage market. In addition not all mortgage approvals will proceed to completion. Estate agent figures- National Association Estate Agents (NAEA), Hometrack and Rightmove Hometrack and NAEA base their indices on surveys of various estate agents and their reported average agreed sale price. Rightmove’s are different and base theirs on the ‘asking price’ of properties advertised on their website. They claim that this can represent half of all properties on the market at any one time. Both sets of data are very much forward looking, reflecting price ‘aspirations’ as a posed to prices paid. Never the less they are a useful indication on ‘future trends’. In periods of low or high demand however they will tend not to be so accurate as buyers negotiate reductions or are forced to pay over the asking price. Royal Institution of Chartered Surveyors (RICS) The RICS involvement in the housing market goes back a long way. Originally most estate agents were surveyors and estate agencies were offshoots to individual surveying practices. This is no longer the case. Large estate agencies are effectively retail outlets employing very few qualified surveyors. However, as an important part of the property market the RICS interest in the residential market persists. Their monthly UK housing market survey isn’t so much of a house price index as a survey of selected members as to whether they have experienced price falls, rises or no movement during that month. It is divided into regions and therefore is useful in highlighting national variations. As you can see there is quite a choice. Why so many figures? In this media age house prices are good ‘copy’. Many companies have caught onto this. It’s great free publicity to have your company in the news talking about the latest price movements. In addition the statisticians and economists are constantly looking at better ways of understanding the markets and the trends and all these figures help to build a complete picture. Which one is best? They all help to give a picture of the market but from slightly different perspectives. The most accurate figure is the Land Registry as their figures relate to actual sales prices. The main problem is that it is only published quarterly and therefore is no good at picking up current trends. If this is required you are probably best of using either of the building society’s figures or Rightmove’s stats. As well as all this free data, there is one company that provides an on-line valuation service that you may want to consider paying for. The company established in 1999 is called Hometrack www.hometrack.co.uk. It’s an independent property research and database company offering information on the latest prices and trends within the residential property market. They provide information to the property industry and also directly to the public via their web site. One of their most useful tools is their property report prepared automatically on-line by entering the properties postcode. These 12 page reports cost £14.95 (inc Vat) and set out a range of information that is useful when it comes to a sale or purchase. Details include: property comparables selected from recent sales, valuations and properties recently on the market, residential stock, market demand and activity. These reports could be useful in assessing factors of local demand and supply; a subject that the Land Registry figures do not address.
Article Source: http://www.realestateinvestmentarticles.net
Property Hawk a site to help UK Landlords. The site incorporates free prop. mgmt software that enables landlords to track all their financial data relating to their portfolio. Land Registry - www.landreg.gov.uk/propertyprice/interactive/ppr_ualbs.asp ODPM - www.odpm.gov.uk Nationwide and Halifax -www.nationwide.co.uk; www.halifax.co.uk Estate agent figures - www.rightmove.co.uk; www.naeea.co.uk; www.hometrack.co.uk (RICS) www.rics.co.uk
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