House prices and property valuations
Since April 2000 the Land Registry has required all conveyancers in England and Wales to record prices paid for all property transactions. This data is now publicly available and a number of websites carry it on-line, making it possible to conduct a search of historic property transactions going back to April 2000. These searches are often area based and relate to a specific postcode. The search will return a list of properties sold, together with the following information: the transaction date, prices, address, type of property e.g. detached and tenure e.g. freehold/leasehold. Unfortunately no information is provided on how large the property is; for instance how many bedrooms it contains. There are a number of sites that provide data free to registered users. These include:
When looking at house prices you should be aware that there is no such thing as the definitive average house price or indeed a single rate of change. There are in fact a number of different sources all calculated in varying ways, each revealing slightly different aspect on the state of the housing market
House prices who’s measuring what!
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:
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 problem with depending on these stats is that they are only published every quarter. They are therefore not very useful in identifying emerging trends.
For the uninitiated ODPM is the Office of the Deputy Prime Minister. These stats were bought out in 2003. They are based on completion prices and are collected from around 50 mortgage lenders. They do however 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
The two biggest mortgage lenders also produce monthly figures. These figures are based on mortgage approvals, which is not always the same as the actual 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 also ‘seasonally –adjusted’. Whilst the figures are very similar, there are subtle differences in methodology. Of course neither will be a perfect reflection of the housing market as in each case the figures only relate to mortgage approvals by these specific companies which is significant, but only reflects a proportion of the total mortgage market. In addition not all mortgage approvals 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 agreed average sale price. Rightmove’s are different. They 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 to become less 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. The survey is divided into regions and therefore it is also 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 prices paid. 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.
Property investors like all investors often seek to make future investment decisions based on historical trends, anticipating that events will repeat themselves. Their reasoning is that by understanding trends; they will be able to correctly predict future developments in the market before others do. This then secures on them a competitive advantage enabling them to invest more effectively and resulting in their investments outperforming the average.
There are a number of very useful sites that carry useful historical data. Amongst the best are:
FORMS FOR LETTING PROPERTY
FINANCE AND TAX ON RENTAL PROPERTY
RENTAL PROPERTY REGULATIONS
FURNITURE AND FURNISHINGS
HMO (HOUSE IN MULTIPLE OCCUPATION)
TENANCY DEPOSIT SCHEME (TDS)
ENERGY PERFORMANCE CERTIFICATES
COMMUNAL HEATING REGULATIONS
INVESTING IN BTL PROPERTY
A GUIDE FOR NEW LANDLORDS
WHICH PERIOD OF PROPERTY
BUYING OFF PLAN
KNOWING THE RISKS
PROPERTY INVESTMENT CLUBS
MANAGING RENTAL PROPERTY
GIVING NOTICE TO LEAVE
NON - PAYMENT OF RENT
GETTING YOUR MONEY BACK
THE TENANT WONT MOVE OUT
THE TENANT DOES A BUNK
RAISING THE RENT
REDUCING THE RENT
REPAYING THE TENANCY DEPOSIT
FAIR WEAR AND TEAR
MOULD AND CONDENSATION
MAINTENANCE OF A RENTAL PROPERTY
LETTING RENTAL PROPERTY
TEN STEPS TO LETTING
WRITING A LETTING ADVERT
FURNISHING A PROPERTY
LETTING AGENT OR DIY
SELECTING A LETTING AGENT
TENANTS ON BENEFITS
LETTING TO STUDENTS
PREPARING AN INVENTORY
RIGHT TO RENT GUIDANCE
TERMS OF A TENANCY
LENGTH OF A TENANCY
RESPONSIBILITY FOR REPAIR AND MAINTENANCE
TENANCIES IN SCOTLAND
LETTING TO TENANTS WITH PETS
LEGISLATION OF LETTING PROPERTY
TENANCY DEPOSIT DISPUTES
ALTERNATIVE DISPUTE RESOLUTION
HOUSING ACT APPEAL DISPUTES
THE LANDS TRIBUNAL
RIGHTS OF LIGHT APPLICATION
APPEALS FROM LEASEHOLD VALUATION TRIBUNALS (LVT's)
POSSESSION - SECTION 8 NOTICE
POSSESSION - SECTION 21 NOTICE
SECTION 21 TIMETABLE AND PROCESS
GROUNDS FOR POSSESSION
PREPARING FOR A POSSESSION HEARING
HARASSMENT BY LANDLORDS
RENT DISPUTES BETWEEN LANDLORD & TENANT
FAIR RENT (RAC)
MARKET RENT UNDER AST
LEASEHOLD VALUATION TRIBUNALS
MODIFICATION OF RESTRICTIVE COVENANTS