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So what will house prices do this autumn?

Agents across the country, hopefully refreshed by a nice holiday somewhere warm, will be gearing up for the phones to start ringing with enthusiastic requests for valuations. There will hopes for a strong autumn, ideally with shorter chains, which will deliver a strong last quarter of results.

Unfortunately the autumn is likely to prove frustrating. The latest RICS survey indicates a moderate increase in buyer enquiries across most areas, but with little change in the sales supply pipeline. 

The prime market, however one chooses to define that, faces greater challenges. Unfortunately that encompasses large chunks of London and its commuter hinterland so an already dysfunctional market has some added problems to contend with this autumn.

When sitting around the kitchen table with a cup of coffee with a potential vendor, what is the response to 'what house prices will do in the autumn' and 'should I sell now?' This is the moment to differentiate the offer: person versus portal. That is, providing practical informed advice given the vendor's circumstances on where the property sits in the market, what the market is doing and where it is going. 

This advice make the added value of person to person interaction. That may of course mean playing the long game and advising against a sale at this point. It also requires a detailed view of the market, latest statistics, economic trends and a view of how this all combines and plays out in a specific location. It is quite a lot to deal with over a coffee, particularly when a vendor may, deep down, only want to hear that their home has gone up in value (a lot).

Given our national obsession with all things housing, vendors and buyers (and researchers come to that) are bombarded with information on the market. Extracting the relevant and appropriate information from the pile is a challenge. 

In July UK house prices rose by 0.4% or fell by -0.6% depending on whether you read the Nationwide or Halifax press release. Annually this amounts to growth of either 3.5% or 7.9%, while in London values rose by 12.7% or perhaps it was 17.8%. There are of course other sources including the Land Registry. The fact is they are all correct (see their respective technical details), but they are also all measuring slightly different things. 

Life of course becomes trickier when looking at forecasts. At present there is a fair degree of agreement on how much prices will have increased by the end of 2015, ranging from 2% to 6% amongst the main forecasting houses. As well there should be, one would think, given where we are in the year. 

In fact, at this point last year there was far less consensus; to the tune of a 7% disparity. Added to this of course, is the fact that there is yet more variation at the regional and local level.

Responding to the question on where the market is going in the autumn is therefore a challenge, particularly when a vendor may be armed with a full arsenal of housing market data, or more likely a preferred selection. There is a natural tendency to warm towards figures that tells the story we want or inherently believe. There is considerable research on this point in the field of behavioral finance. Over the coffee with a potential vendor it is necessary to manage existing views and expectations, whether correct, relevant or neither, in order to provide robust advice. This demands a broad understanding of economic and housing market data, combined with the all-essential local market knowledge. 

My view, for what its worth, is that relatively robust economic growth combined with improved consumer confidence will push average house prices marginally higher during the coming months, but transaction levels will remain weak. All the more reason to capture those sales that do come forward. 'What will the market do in the autumn' and 'should I sell now' are tricky questions. A thoughtful and informed response delivers differentiating advice in a market facing structural change.

*Sue Foxley is Research Director of ThinkBarn

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