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Outdated house price indices misleading buyers and sellers

The most well-known house price indices in the UK are publishing out-of-date statistics and misleading buyers and sellers, according to recent figures by Home.co.uk.

The property search engine found that asking price analysis by some lenders is reporting key property market changes a year ahead of those based on outdated methods such as loan and sales data.

Buyers and sellers are known to ‘steer via a rear-view mirror’ when they look at big name indices – such as those released by lenders Nationwide and Halifax. Recent comparisons on the various analyses published on the Greater London property market has brought such sluggish statistics into light.


In December 2016, it was reported by Home.co.uk that the capital’s average price had begun to decline year-on-year by 0.4%. Similarly, Rightmove’s index – also based on asking prices – reported an annual fall in the capital’s house price by 0.1% in the same year.

Nationwide lagged behind these measures, taking a year to come to the same finding. The lender’s December report for Q1 2017 claimed that prices had slumped by 0.5% year-on-year. However, in December 2016 the lender was still reporting that prices in the capital were rising by 3.7%.

Mortgage approvals appear to be one of the factors causing Nationwide’s delay in analysis, as it takes far longer to gather and fails to identify the very latest trends.

Meanwhile, Halifax (another lender to base its house prices on mortgage approvals) also identified London price trends far later than those based on asking prices. In January 2018 the lender reported a rise in the value of the capital’s properties by 1%, although acknowledging this is the slowest increase for six years.

“Investors seeking capital gains need to time their purchase very carefully,” said Doug Shephard, director of Home.co.uk. “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 The UK property market is notoriously cyclical and using out-of-date data can be toxic for your finances.”

Pitted against asking price research, house price indices based on completed sales fare a little better in terms of accuracy and timeliness.

LSL Acadata, which uses actual price paid data, has only detected annual falls in London property prices since October 2017 (-2.6%). Its latest data from November revealed a 4.1% fall in the capital’s prices, completely different from its December 2016 figures (+6.6%).

Similarly, the government’s UK House Price Index – based on mortgage completions and price paid – reported a rise in the capital’s property prices in its latest figures by 2.3% between October 2016 and October 2017.

As being prompt is an important factor of indices, outdated data can give a misleading impression of the state of an area’s property market – some even fail to include marketing times and stock levels, two other crucial indicators of the market.

Shephard added: “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,” he continued, “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. The trend is your friend, as they say, but only if it’s up to date. Caveat emptor.”


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