{"id":18915,"date":"2018-07-16T12:15:09","date_gmt":"2018-07-16T11:15:09","guid":{"rendered":"https:\/\/www.buyassociation.co.uk\/?p=18915"},"modified":"2018-07-16T12:15:09","modified_gmt":"2018-07-16T11:15:09","slug":"why-you-should-take-house-price-news-with-a-pinch-of-salt","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/en-us\/2018\/07\/16\/why-you-should-take-house-price-news-with-a-pinch-of-salt\/","title":{"rendered":"Why you should take house price news with a pinch of salt…"},"content":{"rendered":"

If you follow the property market, you’ll see a constant stream of new UK house price indices being released, often with contrasting results – but how accurate are they really?<\/strong><\/p>\n

Last week, news of falling house prices broke with a whopping \u00a327bn apparently being wiped off the total UK property market<\/a> since the start of 2018.<\/p>\n

Property portal Zoopla’s latest analysis revealed that the average home<\/a> in the country saw its value fall by \u00a35.12 per day over the first six months of the year, a loss of \u00a3927 off the typical property. Although huge regional variations<\/a> mean that those in the north of the country<\/a> are still seeing fairly strong performance in their property markets, the news might have knocked confidence<\/a> in the sector.<\/p>\n

How do you work out value?<\/h4>\n

However, it is important to note that the methods used in compiling these house price indices varies, and while they are a great way of getting an indication of current trends<\/a> and conditions, they are not an exact science.<\/p>\n

The Zoopla house price index, for example, is actually based on the asking prices<\/a> seen across its website listings. While the website claims to list every home in the UK, marking a property’s “value” based on its asking price is not an accurate reflection, as homes can and often do sell<\/a> for above and below asking price. As it states on its website, Zoopla’s final results are based on estimates “calculated using a proprietary algorithm that analyses millions of data points relating to property sales<\/a> and home characteristics<\/a> in local geographic areas”.<\/p>\n

Property expert Henry Pryor took to Twitter to reiterate the point that such indices do not reflect a home’s actual value:<\/p>\n

https:\/\/twitter.com\/HenryPryor\/status\/1017395705399447552<\/p>\n

How other indices are calculated<\/h4>\n

Halifax, Nationwide, Rightmove, the Land Registry, Hometrack and the Royal Institute for Chartered Surveyors (RICS) all release a regular index showing current house prices<\/a>, but all use different methods to draw their conclusions.<\/p>\n

For example, Halifax’s results are based on the price agreed data on property bought using a Halifax mortgage<\/a>, which is then used to work out the price of a “typical house”. The results are also seasonally<\/a> adjusted, which Halifax explains in its methodology: “House prices are seasonal with prices varying during the course of the year irrespective of the underlying trend in price movements. For example, prices tend to be higher in the spring and summer months when more people are looking to buy<\/a>. We therefore produce seasonally adjusted series to remove this effect and to allow us to concentrate on the underlying trend in house prices.”<\/p>\n

Nationwide calculates average house prices in a similar way, while Rightmove, like Zoopla, uses the asking prices listed on its website<\/a> rather than final sale price.<\/p>\n

The Land Registry provides perhaps one of the more comprehensive indication of house prices, in that it reports on completed sales figures for both mortgaged and cash transactions, while Hometrack’s house price index is based on a monthly survey of estate agents<\/a> looking at sale prices, time it takes to sell, and discrepancies <\/a>between asking and sale price.<\/p>\n

Finally, the RICS report is compiled by questioning around 300 surveyors, meaning it is a measure of sentiment rather than solid statistics.<\/p>\n","protected":false},"excerpt":{"rendered":"

If you follow the property market, you’ll see a constant stream of new UK house price indices being released, often with contrasting results – but how accurate are they really? Last week, news of falling house prices broke with a whopping \u00a327bn apparently being wiped off the total UK property market since the start of… Read more »<\/a><\/p>\n","protected":false},"author":1069,"featured_media":18925,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[59,6],"tags":[33,341],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/posts\/18915"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/comments?post=18915"}],"version-history":[{"count":0,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/posts\/18915\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/media\/18925"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/media?parent=18915"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/categories?post=18915"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/tags?post=18915"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}