Property indices have been friend and foe to estate agents over the years, but the recent turbulent market has created sharp contradictions which have caused me on many occasions to question their reliability and accuracy.
According to Knight Frank’s recent Property Sentiment Index, property prices fell for the 20th consecutive month, yet Rightmove’s latest House Price Index shows asking prices seeing their sharpest rise in ten years. This kind of contradiction reported across the country only creates confusion with the general public and uncertainty in the market.
The property market is built on confidence and, like every other economic market, is easily influenced by positive or negative market sentiment.
All of the monthly indices utilise different sources of data and represent different stages of the buying process, something that the public doesn’t necessarily appreciate.
Whether it’s asking prices (Rightmove), industry or general public market sentiment (RICS / Knight Frank), mortgage approvals (Nationwide, Halifax) or transaction prices (HM Land Registry / LSL Academetrics), the wealth of indices and their vast inconsistencies have a huge impact on the market.
Although a national perspective is useful for property investors and industry professionals, it is important to remember that for most people reading these headlines, their property is their home and their main asset.
Yes, buying a property will probably be one of the largest investments most people will ever make, but I am constantly reminding buyers that this will be their home first and foremost. This sounds very simple and straightforward, but I think households across the country have lost sight of that.
Micro-markets exist not only in every town and city but even street by street, and it’s our job at the sharp end to understand these markets and advise clients appropriately. Defending the latest news agenda is something we are quite used to doing.
If a buyer falls in love with a property and buys it, does it matter that in six months or a year’s time, the price might have dipped by 0.5%? No, I would hope they will stay there, add value and enjoy their home for a number of years before starting to worry about the market again.
As experts in the housing market we should be advising our clients to take these indices with a pinch of salt and concentrate on the basics of what makes a property a good investment and mostly importantly a home.
* David Pollock is managing director at Greene & Co in London. Last year, he published his first book, ‘101 Things Your Estate Agent Should Tell You’