House price indices provided each month by Halifax and the Nationwide have been branded as “misguiding” and “out of date” and “antiquated” in an outspoken attack by rival analysts.
The comments come from Doug Shepherd, director of Home.co.uk which produces its own index based on asking prices.
In the attack on Halifax and Nationwide - which compile indices based on mortgage approvals and other ‘historic’ measures - Shepherd says his own index and that from Rightmove, also based on contemporary asking prices, are far more accurate and useful.
“Steering by the rear-view mirror is not generally considered a safe way to drive and the same can be said of using lagging price indicators to time your property investment or sale. The UK property market is notoriously cyclical and using out-of-date data can be toxic for your finances” he says.
He says the differences between the two broad methodologies have been demonstrated by a comparison of various analyses published on the Greater London housing market.
Shepherd says that as early as December 2016 Home’s Asking Price Index reported that the capital’s average price had begun to decline year-on-year, by 0.4 per cent. Similarly, Rightmove’s asking price index reported an annual fall in the capital’s house prices in December 2016, by -0.1 per cent.
“But lagging far behind these measures is Nationwide, which has taken a year to come to the same finding” he says.
He says the lender’s December 2017 report, for the final quarter of the year, said prices had slumped by 0.5 per cent year-on-year. “But back in December 2016 Nationwide was still reporting that prices in the capital were rising, by 3.7 per cent” according to Shepherd.
He insists that mortgage approvals take far longer to collate than current asking prices.
“Meanwhile, the Halifax, another lender to base its house prices on mortgage approvals, is also identifying London price trends far later than those based on asking prices. In January 2018 it is still reporting a rise in the value of the capital’s properties, by 1.0 per cent, although concedes this is the slowest increase for six years” says Shepherd.
"We are identifying new tops and trends in the market many months before the other indices report the same. The current malaise in the London market serves to illustrate our point. Early in 2016 we warned that Typical Time on Market was rising rapidly and this heralded a market shift to the downside. Then later that same year, price falls began in the capital region leading to the first year-on-year fall in December. Astute investors and sellers will have heeded our call but many will have missed the boat” he claims.
He concludes his attack with this statement: "The ‘trend is your friend’ as they say, but only if it’s up to date. Caveat emptor.”
In response, a Nationwide spokesman told Estate Agent Today last evening: “Nationwide has been publishing its House Price Index since 1952. The data it contains is regularly featured by media and is seen a good barometer for what is happening in the UK housing market.
“The Index is collated through a robust methodology using Nationwide’s own mortgage data, as the Society is the UK’s second largest lender. The data offers a timely view on agreed sales prices because, while asking prices give an early indicator of market trends, they are a less accurate guide to eventual selling prices.”
Estate Agent Today has also approached the Halifax for comment.