The Government is to launch an investigation into the usefulness of its own house price indices – the Land Registry and CLG surveys.
The Office of National Statistics will also look at other house price surveys and report by the end of the year.
The probe comes after a rash of absurdly differing reports and a disturbing gulf between asking prices and even the most generously reported selling prices.
For example, in July the Halifax, Nationwide and Land Registry all put house prices at between £166,000 and £170,000, whereas LSL Acadametrics gave the average house price at £218,119 and the CLG’s own survey put it at £209,505.
None of the house price surveys came near the asking prices on Rightmove, which quoted an average of £236,332 for the same month.
While CLG’s own survey claims to be the most accurate, its prices are at odds with the Land Registry records, which also lay claim to being the most accurate.
CLG only introduced its own survey after expressing concern about the accuracy of other surveys.
The media also regularly report the RICS survey as being a factual poll, when in fact it merely expresses the opinions of some 250 or so surveyors.
Robert Bartlett, chief executive of Chesterton Humberts said: “The plethora of indices and the variety of what they measure is very confusing.
“For example, the CLG index tends to lag all of the other indices, which limits its value. The Land Registry index is useful because it gives a detailed breakdown of property prices by local authority and is generally considered to be the most comprehensive index. However it takes place only when the sale is complete, which means the data lags the RICS, Halifax, Nationwide and Rightmove indices.
“Moreover, figures are subject to revision due to the increased number of transactions that are processed when the first estimate of the index is published.”
Stuart Law,chief executive of Assetz, a property investment firm, said: “The differing figures produced by the various monthly house price indices frequently offer a confused picture of the state of play in the UK property market.
“This is especially true at times of major price correction, when contradictory patterns of positive and negative growth emerge between the indices, as seen several times during the recent recession.
“In addition to the capacity for contradiction across the indices, I have always maintained that individual monthly indices from specific providers should not be viewed as reliable market indicators in themselves.
“Property is an illiquid asset and minor monthly fluctuations recorded by a specific organisation cannot be generalised to the sentiment of all home buyers.”
Probe ordered into 'confusing' house price surveys
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Comments
Jonnie: I never profess to be right. There is no 'right' - but there is plenty that is wrong, I am afraid. I certainly don't want to be right here.
Thank you for clarifying your comment. I hope you appreciate that the slant I suggested - that comments such as that could easily be picked up and used against the profession - was justified.
Sadly, I now find that many Agents I know and deal with have exactly that viewpoint. I find that 'negotiators' are becoming more skilled in talking down the vendors, than talking up the purchasers. Of course, the owners of the businesses - whether indipendents or corporates - are not going to bat an eyelid that another phonecall or two may have earned the company another ten or twenty quid in fees - they are simply too happy to add the sale to their Numbers Game target chart. What would a corporate know, anyway, if a property or two (hundred...) were undersold in a far-off part of their empire?
More debate coming, I feel...
Peebee - as usual you are right but ive not been very clear with my views, i agree that achieving the best price is the most important role we play but my point was that the 'best price' isnt / is rarely what the owner perceives it to be especially if they are making judgements based on the medias interpretation of the numerouse house price surveys.
Our customers should trust us that we know what the true value is and take our advice....................have i explained myself?
Jonnie: Yes, I remember it well - as I do the 'dip' of the early '80s... Mind you - I have a "great time" ALL the time, regardless of market conditions!
I totally agree with you that managing expectations is an important aspect of the job; however, your comment "The point is, do we (I mean the estate agency industry care what prices are doing apart from when we are tryimg to convince some daily mail reader that his hateful little house isn't worth waht he was told a year ago plus the inflation he's read about - we all want volume don't we?" is cause for my concern.
Firstly, as a property professional, surely the price achieved for a property should be of significant importance to you.
Secondly, as you are employed by the houseowner, then their best interests are your best interests.
Thirdly, you may only be concerned about volume, but the people who pay you - the vendors - are certainly not. Their Estate Agent's performance affects them in ways many Agents clearly cannot comprehend (or simply choose to disregard).
Estate Agency is a much-maligned profession. I would reason with you that your comment - published on t'internet for anyone to see - will be welcomed by 'Agent-bashers' as proof of their argument.
Food for thought - and no doubt some 'debate'...
......Oh dear I am sorry about my grammar, doing it on a Blackberry and making myself look like an illiterate fool
I'm not sure about any of theese idexes, as the article says the RICS one gets big coverage and its based on the opinion of 250 jolly nice chaps with patches on their elbows. The point is , do we (I mean the estate agency industry care what prices are doing apart from when we are tryimg to convince some daily mail reader that his hateful little house isn't worth waht he was told a year ago plus the inflation he's read about - we all want volume don't we?
Who remembers (I think you will PeeBee) the early(ish) 90's when there was tons of instructions and thoose of us that knew how to manage our vendors expectations had a great time?
With so many different surveys it is bound to confuse the general public. I think some companies produce their indices purely to keep their name in the spotlight, maybe the media need to focus only on the most authoritative and dismiss the rest.
I just don't know how agents mangaged to survive without surveys, the land registry index and the internet up 'till the 1980's !!! and if i'm honest i'm not sure it's helpful for historic property data to be dispalyed on RM either - or am i just a Dinosaur? Rooooooooooar!!
michael: Who wants battle? Read Nicole's post as I did, and you will see why I asked WHAT I asked, HOW I asked it. (wish that this site allowed you to type words in bold, rather than capitalise them...)
Why, michael, do you feel that there has been a shift in the percentages of Asking vs Agreed prices with your office sales in recent months?
I would suggest that buyers are becoming conditioned to pay less due to negative press; and that Agents are becoming conditioned to reduced offers being made. I have often rumbled on about this self-fulfilling prophecy - I don't know how much more evidence I need to see...
PeeBee its discussion not a battle. In the early part of this year I sold 50% of stock at guide, 10% above guide, 40% below. This week our little office sold 4, asked 415 got 410, asked 235 got 232, asked 220 got 220, asked 310 got 285 so we are having to give a bit now to get sales, where pre-budget we could be tougher. But I win business mainly on board activity and documented pricing research, trying not to have over-priced stock out there. I do often lose instructions by valuing lower than many, but we all suffer that bugbear.
Nicole London: Define "...a bit..." please. How does your factoring work? Do you add a percentage; 'a little bit'; or is it as open to negotiation with the vendor as you seem to think the asking price will be to the buyer?
You assume in your post that EVERY transaction taking place does so at less than the stated price. Are you so certain of this? Or has half of your brain shut down to the idea of getting the vendor Full Asking?
At what point do you stop negotiating?
Over to you...
All of the surveys are an index, a guide only. In some areas properties will sell for more or less than others. It's pretty obvious to anyone with half a brain that the marketing price of a property is going to be higher than the completion price, it's called negotiation and we all factor a bit of this in when we list a property ... maybe not quite as much as some of the corporates do... but we factor a little bit in.
Average ASKING prices aren't worth a carrot surely. If the average asking price of my stock was say £200,000 but I then took on a £1,000,000 property my average would increase, but it means nothing. The only figure that counts for anything is the SELLING price which we get from the Land Registry. Ok, so there's a few months timelag - so what?
Sorry - but didn't we just get rid of a Government who created jobs for the boys in this way?
The average agent on rightmove is a corporate: That would explain the outlandish asking prices. Get a backbone and price them properly.
I'm sure the average weight of buyers has decreased in the last 2 years, whereas their height has remained fairly constant.
Whatever the P's & Q's the Land Registry Index, although historic by three months, is factual. Ask your agents for the current local trends and also check Propertysnake for asking prices?!
Perhpas the givt should look at ALL surveys! With the right question, you can prove most things in a survey. Q: are you in favour of nuclear war? A: NO!!! Press Release: 100% of pblic against nuclear arms!
All they need do is to read The Daily Mail and then to ring up that signboard chap to get confirmation.
Its not the surveys which cause offence (lies lies and statistics!) but the cost these surveys obviously incur...what a waste of money to tell us whgat we all know...until the banks lend the market place will be hard. Simple..that will be £3,500 in fees please.
I've never really seen that the average house price in UK by month has any impact at all on my business. But the average percentage increase or decrease in price would be far more consistent across a range of surveys, and so would probably be more believable to buyers, and would have more relevance. Lets swap from price to percentage.... which nationwide price tracker already does, but by quarter in arrears.
Yes it is confusing but it all helps to keep the market moving. Imagine what it would do to the market if we only had one survey and it reported 2 or 3 bad months.