For many long weary months, EAT has been a lone voice in pointing out the huge discrepancies between the various house price surveys.
It’s currently on the scale of a £70,000 mind-that-gap.
It remains the case that, apart from our readers, no one else has picked up on this – which means that politicians and PR companies trot out whatever happens to suit them best at the time for their own particular purposes. And the national media don’t seem to notice.
The latest story, on Savills ripping up its previous house price forecast, is a case in point. The story garnered significant national headlines.
In case you missed it, Savills has upgraded its housing market forecast from 11.5% inflation by 2017 to 18.1% inflation.
Savills says that the average UK home, worth around £162,000 at the start of this year, will be worth £191,631 by the end of 2017.
The EAT community can effortlessly deduce from this that Savills is relying on the Land Registry for its sums – the problem being that its apparently mammoth forecast of house prices reaching nearly £200,000, or a rise of over £30,000, in five years’ time is a complete nonsense when you look at the ONS survey.
According to the ONS, house prices have already reached that. In fact, rather more than £30,000 over the figure Savills predict in five years’ time. The ONS currently quotes £239,000.
Does it matter? It probably falls somewhere between an absolute disgrace and a joke that the Government remains happy to pump out two such totally conflicting ‘official’ house price surveys, hiding behind the lame excuse that the methodology is different.
However, what is odd is that upmarket Savills has chosen to align its forecasts with the ‘cheaper’ Land Registry survey – and not the more expensive ONS one.
Even more curiously, Sequence – not a particularly upmarket brand – also already puts house prices above Savills’s prediction for five years’ time (see next story).
All this said, what is not odd is Savills’ reason for pumping up its price forecast: it’s all that government intervention in the form of low interest rates and schemes such as Funding for Lending and Help to Buy.
But the prices themselves? Oh, whatever. You know.
The plain fact is that we have no idea what the average UK house price is. We know what eggs cost, what a loaf costs, and what a pint of milk costs: but houses?
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Comments
"Does it matter?" yes and for the very reason of the excuses given.
With about 20% of the country riding an unsustainable inflation of prices there is a personal vested interest for an awful lot of people to keep the balloon inflating. With property prices in the South East so ridiculously over extended the entire region has to rally together to ensure they don't catch a nasty epidemic of two ooh one three Property Flu.
With Valuation litigation the inevitable fear in the back of the mind of anyone who provides any kind of opinion on value in such a market it is obvious that at some point a Board nerve will break.
EAT demonstrated the nervousness around Property valuation tools when David F’s well intentioned hawking of the Angel’s Valuation Add on received the expected reception when he naively tried hawking it to the readership again.
Anyone providing any sort of comment or advice on value when the balloon becomes so inflated has to be so extremely cautious and even the RICS discussion groups are talking formal Red book valuations for casual advice to clients considering a purchase. Serious stuff!
The valuation Tools are flawed and that is what is powering all of the informed and official valuation stats. Seek out and listen to the Great Hargesia Goat Story (Radio 4) it perfectly describes what is going on in the South East.