There’s no doubt that the housing market is one of the most-watched barometers of the economy as each new year begins and at a micro-level, it’s key for would-be buyers and sellers in particular to have an understanding of what is going on. But making sense of property market data can be mind-boggling. We can help with that – let’s take a look.
Local Property Market Data
In my opinion, a conversation with local estate agents is an unbeatable way of establishing the state of play in your local area.
The most experienced ones will have detailed knowledge of what types of homes are selling most quickly, and which streets are the most popular.
‘The market’ is really a matrix of lots of localised factors, which these agents on the ground will know best.
National House Price Data
We are bombarded almost daily with national house price information. This is a good thing in general but it’s important to realise that many figures are taken at different points in the housing market cycle.
To get the most from them, it’s important to understand what they represent.
Indices based on Asking Prices
Some indices, most notably the monthly one from Rightmove, base their figures on the original asking price. It’s important to note that an asking price is an estate agent sales valuation, not a sold price.
Rightmove looks at about 80,000 to 100,000 homes that are registered for sale in England and Wales monthly.
In a seller’s market, the asking price is likely to be close to the ‘actual’ price paid by the buyer. This is because the economy may be strong and there are fewer homes for sale than there are buyers. So prices move up as vendors and agents ‘try their luck’ with an ambitious figure.
But in a buyer’s market, the asking price is likely to be higher than the actual purchase price. This is because there are more homes on the market than there are buyers. This could be because people sit on their hands due to rising interest rates and wider concerns.
Indices based on Mortgage Lending
The best known are Nationwide (which has about 12,000 mortgage loans a month) and Halifax (which has around 15,000 monthly). The total size of the ‘sample’ for these indices is smaller than, Rightmove, but applies to the whole UK.
However, these samples are based on agreed sale prices for each home. These are passed to the mortgage lender as part of the buyer’s application for a loan.
One thing to remember is that approximately 35 per cent of house sales are completed without a mortgage. So if the market is different between homes bought outright and those using a loan, these indices will not reflect the whole picture.
The Government Index
Many people say this measure, called the UK House Price Index and produced monthly, is the most authoritative.
It’s based on all completed transactions throughout the UK, typically 100,000 a month. It has lots of details about the price movements of different types of houses or apartments. It also accounts for whether the buyer is paying cash or using a mortgage.
But by the government’s own admission, the figures may take as long as six weeks to compile.
While the results from the government index are probably the most statistically comprehensive, they are also the oldest. So by the time they are reported on TV or in the press, they can present an out-of-date picture.
Property Market Data from Propertymark
Each month Move iQ presents a property market data digest from Propertymark, the leading trade body for estate agents in the UK.
Their monthly reports are slightly less statistical than many indices but give an unparalleled insight into the ‘front line’ of the market. This offers early indicators of changes in the market.
The Propertymark figures are unavoidably national in nature but they reinforce the importance of talking to local agents on the ground to find out the local picture.
All of the indices have a role and offer important context but no one index alone tells the complete story.
Speaking to agents who know your neighbourhood, your street and perhaps even your house should not be underestimated.
Last Updated: January 6th, 2023