Are property prices rising or not? A guide to the major house price indices

Property firm Rightmove reckons that the average price for a British house hit £243,737 in April, eclipsing the previous peak of £242,410 in May 2008 by 0.5%. Meanwhile, the Nationwide’s last survey said prices fell 1%, while the Land Registry reported a rise of 0.1%. It’s all rather confusing. So here’s our quick guide to the key house price surveys.

First in line is the Rightmove survey. This is based on asking prices – the price that sellers hope to achieve. However, until a sale is agreed and contracts have been exchanged, an asking price is just that. Furthermore, as with all these surveys, an average can be misleading.

London asking prices may have jumped 14.9% since the May 2008 peak, but in Yorkshire, for example, they have fallen 11.6%, while across the country as a whole (excluding London) they are down 4.3%. So although Rightmove’s data always grab the headlines, their main house price reading isn’t terribly useful.

Once a seller accepts a buyer’s offer (which may typically be 5%-10% below the asking price), the buyer arranges a mortgage and a surveyor confirms the property is worth the agreed price. This is roughly the point in the process measured by the monthly straw poll of members of the Royal Institution of Chartered Surveyors.

 

Estate agents and surveyors are asked whether they’re optimistic or pessimistic on prices, among other things. If 55% think prices will rise and 45% think they will fall, the reported “balance” is ten. In their February report, the balance was minus ten, indicating pessimism.

Next up are the Nationwide and Halifax surveys. These rely on approved mortgages to measure prices, so they both miss cash sales. Because they use different samples, their numbers vary – for March, for example, the Halifax reported a 2.2% rise against a 1% fall for Nationwide. Also, because mortgages are approved well after a seller markets a property, the surveys lag Rightmove.

Lastly, there’s the Land Registry. When you complete on the purchase of a property, the final, binding price is recorded and the title deeds switch from seller to buyer. As such the Land Registry number (the most recent one was for February) is the most reliable, but it also suffers the greatest time lag.

• For more, see MoneyWeek’s
UK house price indicators.

8 Responses

  1. 23/04/2012, Gordon wrote

    As you say, UK residential property is not a market that you can generalise about – London and surrounds seem to be part of a global market that money is pouring into at the top – and pushing prices up all the way down. We’re looking to buy and family house prices (3+ beds) in london zones 2 and 3 are about 10% up since January.

  2. 23/04/2012, Sibley wrote

    Gordon

    Mortgage rates are creeping up, stamp duty has gone up, disposable incomes are falling and house prices in London are out of touch with reality. Common sense suggests that the 10% rise will unwind itself very quickley

  3. 23/04/2012, Boris MacDonut wrote

    You forgot the DCLG whose figure is at about £208k and whose recordsd go back to 1930. Also the Land Reg’ figure on the BBC business pages is at £228k in March 2012.
    #1 Gordon London is not reaaly part of the UK housing market as it is a refuge for the world’s rich to shelter their millions. It also now has an average HP more than twice the rest of the UK.

  4. 24/04/2012, Harold wrote

    Economists predicted that over the next five years, longer-term forecasts will gloom! However the percentage of the growth predicted would be just an average 2.8 per cent annually growth– a far slower rate than the 1980s to 2000s period.

    Singing off
    http://www.spwca.co.uk

  5. 24/04/2012, Boris MacDonut wrote

    #4 Harold. That is still 15% in 5 years and on the average house that makes £525 a month. OPf course London prices will help,i’m sure they will rise even further once the ethnic cleansing is established . 800 families moved to Stoke. Even Mussolini and Hitler would not have dreamt that one up! But of course we have a couple of posh boys who don’t know the price of milk in charge.

  6. 24/04/2012, Boris MacDonut wrote

    Property prices are rising,unless you look at the very short term. If you were unlucky enough to be duped into buying in 2007/08 you are down a little. But these are the facts :
    Since 1962 prices are up 6,500% , 1972 up 3,200%, 1982 up 700%, 1992 up 211% and 2002 up 52%. On that basis (and there are never any certainties) prices may well be up by another 30 % by 2022…………or they may be up by even more. What is almost gauranteed is they will not be lower.

  7. 25/04/2012, Gordon wrote

    Sibley – I’d prefer if you were right but I can’t see why the money is going to dramatically stop coming in at the top of the housing market – large parts of the world going/gone crazy – rich people looking for relative safe havens and London ticks a lot of boxes for investment generally. Inflation and exchange rates not helping domestic buyers either.
    Harold – What happens to UK average if you take London values out of the sums?

  8. 27/04/2012, Cassandra wrote

    Your statement here is wrong

    “First in line is the Rightmove survey. This is based on asking prices”.

    It should be

    “First in line is the Rightmove survey. This is based on INITIAL asking prices”

    All the subsequent price drops are ignored. It’s pure fantasy.

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