Experts have warned that the benchmark figures on house price growth supplied by the Office for National Statistics (ONS) is unreliable and overstates growth, following news that the two previous months’ figures have been revised downwards.
The index, which the ONS describes as “experimental”, revised down the previous two months’ house price growth significantly last week. The annual rate in December, initially reported as 7.2%, was scaled back to 5.7%.
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Lucian Cook, head of residential research at Savills, told the Telegraph: “The ONS index was trailed as a single definitive index for the UK housing market, providing more detailed information on transactions and house price movements at a local level and between different parts of the market. This was always going to be a huge undertaking, fraught with difficulty.
“However it continues to be blighted by issues around accuracy and reliability. These have been sharply brought into focus by the growing discrepancy in reported transactions numbers compared to figures coming out of HMRC.”
Last week’s release by the ONS said that transactions had fallen 21.2% in England in the 12 months to November 2016; HMRC’s record of the same sales volume reported the number had fallen by just 7.1%.
An ONS spokesman said: “Homes can only appear in the index once the purchases have been registered with the Land Registry. Due to the delay that can occur between purchase and registration, this can lead to initial house price estimates being revised, though the revisions are usually small.
“Changing the current revisions policy would affect the number of transactions recorded but would usually have little impact on average prices. ONS is reviewing its revisions policy to ensure all transactions are recorded.
“While revisions can be in both directions, over the last six months they have tended to be downward.”
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Meanwhile, the National Association of Estate Agents reported that the number of sales agreed rose to a 10 year high in February, to 11 per branch; the last time this figure surpassed 10 per branch was in September 2007, indicating buyer confidence is growing. In January estate agents agreed eight sales per branch, up from six in December.
Mark Hayward, Chief Executive, NAEA Propertymark said, “The number of sales agreed reaching a 10 year high indicates the housing market is moving in the right direction. However, FTBs need to be a priority – the number of sales made to the group dipped in February when it should be growing. As house prices continue to rise, the market’s most vulnerable buyers are being priced out and the only way to address this is to increase housing stock. The Government have pledged yet again to build more homes, but our members aren’t feeling optimistic about the plans. If promises are kept and we see construction sites set up across the UK, we’ll be in a better position in a few years than the stark reality we will be facing if this doesn’t happen.”
