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A baffling report issued by the Government yesterday (Tuesday) showed that its own official statisticians are completely at odds over the direction of the housing market and are working to entirely different figures.

The Communities and Local Government data showed that in March, UK house prices increased by 0.9% over the year and by 1.2% over the month.

The CLG report put the average UK house price at £205,565 in March.

The report is at total odds with the other official report into house prices, released by the Land Registry.

Just two weeks ago, on May 4, the Land Registry reported that house prices in March fell by 1.1% in the month, and by 2.3% over the year.

The Land Registry – reporting for England and Wales, rather than for the whole of the UK – put the average house price in March at £160,996.

However, the fact that the Land Registry reported house prices for only England and Wales should – according to the CLG report – have actually boosted the Land Registry findings.

According to the CLG report, average house prices increased during the year, March 2010 to March 2011,  in England (1.3%) but decreased in Scotland (-0.7%), Wales (-2.5%) and Northern Ireland (-13.9%).

CLG itself said last year that it was uncomfortable with the different findings of house survey reports.

It proposed an investigation starting with the Government’s own two surveys, that of CLG and the Land Registry.

The investigation was due to have reported back before the end of last year, but nothing has been heard of it.

Meanwhile, the two official reports have continued to pump out diverging results.

By contrast, the Halifax and Nationwide monthly reports have been singing from a broadly similar maths sheet for some months, consistently reporting house prices at around the £165,000 mark.

Comments

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    Ric, ever wondered why male Gypsies walk in a funny way?

    • 21 May 2011 12:11 PM
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    Rant....be careful asking a question like where do I put my crystal ball!.....you know the temptation will be too hard to resist for some.....

    • 21 May 2011 11:52 AM
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    Ric - at 0.5% interest rates, I don't think prices are going to plummet. They could grind down for a while though as they are now. Raise interest rates to the historical level of 5% and that scenario looks different. In previous boom and bust cycles, there has been an undershoot on the way down, with average prices going below the three to four times average salary that, until recent years, has been considered the 'norm'.

    I doubt we'll get 5% interest rates for a while, but I don't think they'll be 0.5% for the foreseeable future either. If inflation takes hold and starts hitting double figures, then who knows where interest rates could go. They've hit 10% in living memory, a figure which looks as unlikely as 0.5% did just three years ago. In those circumstances, then 50-60% off peak, especially in real rather than nominal terms would be an unlikely but not extreme scenario in my opinion. Now, where did I put my crystal ball...?

    • 20 May 2011 22:27 PM
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    Hi Rant

    What confuses me is some HPC'ers seem to think we ill fall another 20% to 30% meaning a 50% to 60% drop from the 2007 peak....which just will not happen.

    Although like you say salaries will play a large part in everything.

    Anyway, enough of property for today, I have had enough.....my mind is mushy after the day I have had.

    Have a good weekend all.....8>)

    • 20 May 2011 17:54 PM
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    Ric - the housing market will definitely rise again, it's just a question of when and from what starting level.

    If 20 to 25% is a crash then by some measures (Halifax) we've already reached that level of falls from peak 2007 prices. The decline is closer to 30% in real terms, but since salaries aren't rising with inflation, I think that point is less relevant.

    • 20 May 2011 10:57 AM
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    @Rant - I dont think it wil drop 10% full stop so I am not sure I have suggested 10% over a year can not be considered a crash I was referring to Wills asking price observation!

    I said in reply to Will that him seeing asking prices drop 10% is nothing but a correction of over zelous vendors and agents....and only if the 10% comes off the Average SOLD prices can we say the market has crashed.

    Granted I used the term a month or so, but that was directly at Wills comment, I agree 10% off over 10 months or 2 months is 10% which every way you dress it, BUT 10% is not a crash, 20% to 25% is a crash I think and certainly that figure must be OFF sold prices not asking prices, as I say, let me put your £100k home on for £200k, then sell it for £95k.....was is a 5% drop or much worse.....! This is why HPC early shouts off the back of asking price movement is laughable, yes the market has and is possible falling but it will rise again..

    • 20 May 2011 10:52 AM
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    Pee Bee - with analysis like that, you should write for the BBC or Daily Express! The efforts they go to avoid using the word 'fall' is a lesson in creative journalism all in itself - according to them house prices have been 'moving sideways' recently, a 5% real terms drop is described as a 'stagnant market' etc.

    I would disagree that house prices are being controlled by buyer need. Whether they should or shouldn't be doesn't matter - I think in the last decade or so, the availability of cheap credit has had a much bigger impact on prices. We've had that discussion before though I'm sure.

    • 20 May 2011 10:31 AM
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    rantnrave: I am certain Ric will shed his own light, as will no doubt others - but here I am again with my take on things...

    It's the word, innit? "Crash". Usually followed by "Bang" and "Wallop". To the population at large, it is a collision or impact that happens instantaneously.

    Over a period of time, property prices will inevitably rise or fall due to a myriad of factors - however mainly it is controlled by buyer need; buyer confidence; and buyer ability. ASKING PRICES are irrellevant. SALE PRICES are all that matters. I think we all agree on that one. They may well reduce in the coming months or even years - that is to be seen. However, based upon current figures, a drop of a few hundred pounds here and there - even on a monthly basis, hardly warrants the word "crash". Aeroplanes come down faster - and thank goodness the vast majority touch down with little less than a spilled drink.

    Unfortunately, the words and phrases that Agents and "Property Experts" use - like 'soft landing'; 'period of adjustment'; don't suit the purposes of your movement or the Press, as words such as these will never sell papers. The fact that they are the accurate words - well - that's up for debate, isn't it?

    Until I see the headline " Horror as Tortoise Crashes Into Garden Gnome", I'll stick to my version, if it's all the same with you, matey... ;o)

    • 20 May 2011 10:03 AM
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    Ric - I agree that a 10% fall over just a couple of months is definitely a crash. Would you consider a 10% fall spread over a year to be a crash? Would a 5% fall over a year in nominal terms but 10% in real terms be a crash? I'm not sure why a 'crash' has to be defined by the speed rather than the amount of falls. Feel free to enlighten me though.

    • 20 May 2011 09:20 AM
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    @Will

    Sorry but...

    If I put something on the market for 10% more than it is worth then the likey hood is I will need to correct the asking price by 10% , hw many times have we read this week optomistic vendors raise asking prices, their reductions do not constitute a housing crash.

    Until we see the National Average price (Sold Prices ie LR figures) fall 10% in one/two months, there is no crash, it is more of a fall, which will be followed by a rise at some point if not next months report..all the agents who were saying they were very quiet are slowly but surely saying viewings are well up, offers are too and as a result sales coming through.......

    I know the more you say something the more you are meant to believe it, but Will please my ears are starting to hurt with the HPC rubbish........

    • 19 May 2011 23:01 PM
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    Ric,

    No crash eh. A "crash" is defined as >=10% drop. I am seeing local drops in asking price of 8-15% in one go, so it's only a matter of time these feed into sold prices. The only thing keeping up the national average is the funny offshore cash buying/washing in Prime London, and I think that's pretty much drying up.

    If I was a down sizing vendor at the moment, I'd be praying for a completion by mid June. The canny ones will drop their asking prices as I don't think praying will help them.

    Anyone doubting a second wave crash just has to REALLY think about where unemployment and interest rates will be at year end. It's a no brainer.

    • 19 May 2011 13:41 PM
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    The reason we are not heading for a crash like, lets say America, is that we don't have jingle-mail and can't walk away from our mortgages in the same way. Our bad debts go with us. This goes hand in hand with the high asking prices vs reduced selling prices debate.

    There are many vendors holding out for too much money because without those pie in the sky prices, they haven't got the equity required to move, or worse are in negative equity. When reality finally dawns on these vendors, all that happens is that they withdraw from the market, batten down the hatches and wait to sit out the storm. For the most part, they can afford the mortgage repayments (for now whilst interest rates stay low) and there is no financial pressure on them to move.

    IMO prices here are 20% too high, we are seeing drops of about 5-7% a year and I think that we will have a correcting market like this for another 3 or 4 years. Wage inflation is flat for now, but that won't last for ever and in time wages will rise as house prices fall meaning that it won't take decades for the correction to finish.

    We may see more repossessions as interest rates rise, but there are plenty of "bottom feeders" around and reposessions usually sell quick, meaning that many people still have the appetite to buy - at the right price of course.

    • 19 May 2011 13:16 PM
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    Simon,

    Plus (as illustrated in today's Telegraph) the discrepancy between inflation and wage rises the UK are effectively having a paycut of 3% this year.

    This talk of a gradual correction is a fallacy (IMO) as that is predicated on wages actually rising.

    • 19 May 2011 12:36 PM
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    Taking the monthly sold price statistics (specifically Nationwide, Halifax and Land Reg), what would count as a crash? I'm just putting the numbers below, which are say in nominal terms, out for discussion.

    MoM falls between 0 and 0.5% - statistical fluctuation of little significance
    0.6% to 1.5% - price correction
    1.6% to 2.5% - price crash
    2.6% plus - price implosion

    Much of the last 12 months have seen falls (or the odd increase of under 1%) of the first kind. Latest Land Reg and Halifax releases have however moved into what I would call 'correction territory'. Extrapolating the curve of recent months' data suggests a correction rather than a 'crash' will be the way forward. How long for though? Any one care to agree or disagree?

    • 19 May 2011 12:25 PM
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    RE PbroAgent "we are not headed for a house price crash. What the vast majority of the country is experiencing is a gentle downward correction in prices to bring them back in line with wages."

    So we had a decade when house prices rising 10-15% a year for a decade when salaries rose between 3-5% this slow gentle so called correction is going to last decades.

    Then you have to consider wages are frozen or annual increases are lower than normal being eatern by big inflation and higher taxes.

    No house prices will fall in a larger way than you think because the banks can't afford to irresponsibly lend again and people have less money.

    Selling prices have been falling for near a year now, its not going to pick up for a long long time especially when prices are falling at the best selling period. What happens at the worst time of the years for selling,?

    All the other western economies with giant housing bubbles have crashed why not us? Please don't quote small Island, overcrowded, limited land etc or we will simply start quote Japan yet again

    • 19 May 2011 11:52 AM
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    Well Ric you were wrong about the number of posts

    I think all the agents have jumped off a cliff since the start of April.

    It is interesting that we are in a period of "do nothing" or "wait and see".

    Vendors doing nothing with their prices as they think the economy will recover to suit their timescales, when clearly they have over-priced their house; and buyers waiting to see when prices will fall.

    Inaction is the worst thing for the market and sales volumes especially. Panic is good - losing ones job say - as this quickly makes people realistic with their price expectations - and guess what a buyer comes out of reneted because they have saved their deposit and can buy at the right price.

    Positivity is good as buyers and sellers feel good about moving and spending etc.

    At the moment it is all a bit numb out there.

    None of the house price statistics really tell the truth about the state of the market, except that transaction levels stats do.

    • 19 May 2011 11:04 AM
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    Hi PbroAgent - As simplistic as my example is, a comment that prices should be 3 times a salary is equally simplistic as you point out much more will determine the pricing.....although yes my example is a little extreme.

    @Will......No crash, seriously it will not happen....Correction yes, but crash no......the mere fact people are pointing out Price reductions are in the paper shows the market, estate agents and vendors are reacting to the correction which is needed so only a matter of time now before the sales will increase.

    • 19 May 2011 10:09 AM
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    Don't need any fudged average national statistics to TELL me what's going on.

    I've just got to open the weekly local rags's property paper to see the growing number of ads with "New Price" in the top left and the un-sold stock clogging EA windows on-line & on the high street. Glossy brochures collecting dust so now I'm getting them posted to me without asking.

    I've joined the dots that spell "CRASH" on the wall.

    • 19 May 2011 09:37 AM
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    @Ric of course average house prices are linked to average wages, the housing bubble was caused by people losing sight of this link. If an average bank lends an average buyer 3-4 times income to buy an average house then there is a direct link - especially as the vast majority of buyers will use a mortgage to buy a house.

    Of course the figures will be skewed a little by other lending models such as BTL and some buyers can afford more than others, but generally a buyer will buy a house commensurate to their income, i.e. If someone earns more than the bloke in the three bed house he will probably buy a 4 bed house.

    Your example of a £20k and a £50k buyer is too simplistic. Yes the vendor will want more money, but if all the surrounding houses are being bought by buyers on average wage (let's say for arguments sake £20k) and the banks are lending 3-4 times wages and therefore are being bought for 60-80k, who in their right mind would want to pay 150k for it and what surveyor would let him without downvaluibg it on survey?

    You are right though we are not headed for a house price crash. What the vast majority of the country is experiencing is a gentle downward correction in prices to bring them back in line with wages. Once this has happened prices will slowly begin to rise again.

    In Peterborough first time buyer properties are currently unaffordable to first time buyers, the only properties they can afford are of the shared ownership verity which do little when sold to stimulate the rest of the housing market in the area which is stagnating beyond belief. So whilst I am not an HPCer I do advocate a reduction in prices because it makes them affordable and on so many levels sensible.

    • 19 May 2011 08:42 AM
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    Simon, this is old ground ive said before prices can not and will never be determined on average salaries FULL STOP.

    Reason and you figure which is right try and think common sense not HPC rubbish.

    Two people wanting the same house, one earns £20k a year and the other earns £50k a year.

    (1) What is the house worth based on your version of a house being worth 3 times a salary?
    (2) What do you think the vendor would answer?
    (3) As an agent what would the best practice codes suggest I should do in terms of getting the best price?
    (4) If you were the vendor would you want me to sell it for £60k to the low earner or £150k to the higher earner?

    I have always said 100% mortgages are horrible! so we agree on this bit "only"

    So if your left £50k in a will from a loved one, is this not a gift (no matter how unwanted) your suggestion is if you have not saved it you should not buy? Assuming you mean cooking the books and using preted gifted deposits I agree, but then be specifc, I would encourage anyone getting thousands as a gift to invest it in a home "why not"

    I think there is a change in the air Smon and your wish for a crash is not going to happen......

    • 18 May 2011 22:58 PM
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    Wardy, you may find that in the long term 3-4 x annual salary is, indeed, a good guide to affordability. With interest rates being all time low, it's easy to get used to the idea.

    The old rule of a thumb calculating whether your mortgage would still be affordable at the rate of 10% is still a valid one!

    • 18 May 2011 20:57 PM
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    Simon,
    you may find mortgage amounts are calculated on afforability rather than income multiples these days.

    • 18 May 2011 15:50 PM
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    @simon

    .... RE Ric "What is Normal?"

    3-4 times average salary, the historical and normal lending criteria .......

    Who says?

    The price of a product is what someone is prepared to pay and not much to do with the amount one wishes to borrow. The loan is the amount the lender bases your 3-4 times salary. Actual purchase price has nothing to do with 'average' salary.

    • 18 May 2011 15:47 PM
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    RE Ric "What is Normal?"

    3-4 times average salary, the historical and normal lending criteria.

    Normal prices are not prices including gift deposits, shared equity, 100% mortgages, interest only mortgages, liar loan self certs which plagued the market.

    All the above allowed prices to rise, not due to added value in houses but lax and fraudulent lending. That is not normal or responsible.

    Also you can't give asking prices the same weight as selling prices.

    Selling prices are showing prices are falling, asking prices don't matter if they can't have a hope of being realised.

    Land registry, halifax and nationwide are the figures to watch.

    • 18 May 2011 13:49 PM
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    National Averages are almost meaningless. There are huge regional differences.
    Although they are a little delayed Land Registry (factually accurate) could do us all a favour and stop all this confusion by publishing their stats. by Regions, plus the breakdown between types of property, Detached, Semi, Bungalows, Flats etc. Or is this not possible?

    • 18 May 2011 13:16 PM
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    "CLG itself said last year that it was uncomfortable with the different findings of house survey reports.

    It proposed an investigation starting with the Government’s own two surveys, that of CLG and the Land Registry."


    I can tell them the diffence now, for free.

    LR, Halifax and Nationwide all attempt to measure the price of a "standard" house, and come up with figures between 160k and 170k.

    DCLG report a simple average of the whole market. So do RM and Acadamentrics, and they all come up with a figure that is over £200k.

    http://www.acadametrics.co.uk/Index%20Monitor.pdf

    • 18 May 2011 12:54 PM
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    @Simon

    What is Normal?

    • 18 May 2011 12:53 PM
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    Rant - I may have missed this before at some point, so apologies if I have. I'm interested (nosey) to learn what it is exactly that you want to happen in the property market. I'm interested in specific numbers and time scales...

    If you don't want to answer, then no worries.

    • 18 May 2011 12:49 PM
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    Its clear house prices are overvalued, its clear house prices are falling and it is blatantly obvious that house prices will continue back to fall to normal levels.

    Also the public wages are being cut, frozen and tax with inflation are eating deeper into this disposable income. Is there really anyone here who thinks house prices won't come down to normal?

    • 18 May 2011 12:29 PM
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    Ray - absolutely. Irregardless of the impact on house prices, the news that less people are out of work is welcome. I don't only have opinions on house prices in case any one doubted ; )

    No more ramblings from me unless they are back on topic.

    • 18 May 2011 12:22 PM
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    rantnrave - Good morning!
    Well it isn't exactly BAD news is it? Cheer up! Lets hope it also becomes a trend.
    (These pundits with their almost daily price statistics also seem to deal in small percentages).

    • 18 May 2011 12:10 PM
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    Ray - veering off-topic here - if the banks will neither repo those behind on repayments or lend to those wanting to buy a house, I'm not sure it matters if the unemployment rate goes up or down a tenth of a percentage or two.

    • 18 May 2011 11:39 AM
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    18/05/11

    Scoop!

    Good news for the housing market.

    UK jobless figure falls.

    All EA's switch off EAT and start working again!

    :>)

    • 18 May 2011 11:25 AM
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    Lies Lies and Statistics!
    Amazingly cant stay as have work to do! I know it must be a blipp of sorts.

    • 18 May 2011 10:15 AM
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    These indices / surveys are all recording different things. It is however the headline number that grabs all the attention, with much less thought being paid to what it is that is actually being reported. Different data is then compared as like for like, which it isn't.

    The Land Reg is often regarded as the most complete - but it's effectiveness is reduced by being a month behind Nationwide and Halifax etc. It also provides more of an indepth regional breakdown that some are calling for (not sure why though - strip London out of the national indices and price falls in the other regions become much clearer).

    • 18 May 2011 10:03 AM
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    Why are they asking for the views of 6 and seven year olds?
    Seems a bit odd to me.

    • 18 May 2011 10:01 AM
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    Right, well, (arms waving), hum, ho...

    [Lies, damn lies, etc...]

    I think the problem is that it depends on where you are.

    And I don't mean North or South, but more like this high street compared to the next one up the road.

    We are having a tough time, but surviving.

    I have a friend (an estate agent with a firend? I promise I'm not lying!) who runs a business next town over and he is in a terrible state and he is just as good (or bad) an agent as me with much the same principles (right price, proper fee, etc).

    There is less than 3 miles between the two of us and having a quick look on RM & FAP it's not just him, his local competitors are in the same boat.

    If that is the truth on the ground, how on earth is a statistician looking over the whole country to give an average supposed to work it out.

    Really, the question at the moment is should they even bother, because it is unlikely they COULD get it right.

    • 18 May 2011 09:02 AM
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    LOL - 100 posts plus coming this way!

    • 17 May 2011 16:47 PM
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