Does House Price Index Data Provide A Clearer Picture Than The Newspaper Headlines Suggest?

Does House Price Index Data Provide A Clearer Picture Than The Newspaper Headlines Suggest?

Does House Price Index Data Provide A Clearer Picture Than The Newspaper Headlines Suggest?

There can be a great deal of contradiction with the rising number of published House Price Indices, (HPI), that attempt to show the general public what is happening in the UK residential property sales market.

Many Spotlight subscribers are already aware that some of the published House Price Index data provided by mortgage lenders only relate to residential property sales, whilst others relate only to property asking prices.

However, property purchasers are often told to use the official published Land Registry data as a true guide to property prices rather than rely on any house price index data, but Land Registry data is a few months out of date because the Land Registry only record actual completed residential property sales.

Consumers need to know if all the HPI data is anywhere near accurate before they decide to part with cash to purchase a property, and with some degree of disparity between different indices the information provided can be confusing.

However, one thing is becoming very clear – UK property price growth is slowing!

House Price Indices Can Be Misleading

House Price Indices Can Be Misleading

Breaking down data provided by individual indices shows that there is still a great deal of regional property price variation and properties in London remain way out in front in terms of price growth.

However, some UK regions are still waiting for the promised strong property price growth as they are still lagging way behind the predicted peak of UK property prices.

Rightmove reported a 0.9% upturn in UK property prices this Autumn, whilst reported that London property prices were beginning to fall due to a cooling market.

Hometrack said there was no property price growth in September, while RICS stated that the upward property price momentum remained firm but demand for property ownership had moderated further.

Nationwide reported that annual property price growth had slowed in September and the Land Registry reported that data from August 2014 showed a 1% monthly price change.

Examining the data more closely, it is clear that several UK regions, particularly those in the North of England, Wales and Scotland, are still well below the peak property prices of 2007, before the economic downturn and property crash.

In the North of England, property prices are 8.3% or £13,400 (GBP) below their peak of March 2008. While property prices have passed their October 2007 peak for the first time in the South West, according to figures provided by Acadata.

Despite all the doom mongering by the press with numerous newspaper headlines stating that the UK is risking another property price bubble especially with residential property prices beginning to cool in London and the South East, the truth is that property prices are still considerably higher than they were a year ago.

The latest Land Registry index showed a significant annual property price increase of 21.6%, while the North East witnessed the lowest annual property price growth of just 3%.

What is going on with the UK property market?

What is going on with the UK property market?

When all the separate house price indices are viewed simultaneously the data can be misleading, contradictory and confusing for many people.

According to Rightmove data, demand for property ownership slowed during the summer months but enquiries sent to agents increased to the second highest level ever recorded in August.

So who should we believe?

The average number of potential property buyers who registered an interest in property through agent members of the National Association of Estate Agents (NAEA) increased by 1% in August but agents also reported a significant decrease in the average number of property sales agreed per branch.

According to the Hometrack HPI, demand for residential property dropped 2.1% during September with the number of new buyers registering with agents falling this quarter, equating to a drop of 4% over the last four months.

The Royal Institution of Chartered Surveyors (RICS) report that there is a slight lessening of demand for residential property across the majority of UK regions, but demand for residential property in Scotland and Northern Ireland remains stronger.

Acadata estimates that the number of residential property transactions in England and Wales during September dropped by 9% from August levels. But this is in line with the long term seasonal trend of a usual decline in transactions of around 10% from August to September.

However, this does not correlate with the actual number of residential property sales recorded in September, with figures up 16% since the same month in 2013.

The supply of property to market remains historically low according to data provided by, showing a rise of just 3% on the already record low levels observed back in 2013.

Supply of properties to the residential property sales market dropped the most in East Anglia over the last 12 months, with a fall of 6%.

The NAEA reports that the supply of residential properties for sale in the UK during August decreased slightly from the previous month, with an average of 49 properties available per NAEA member branch, compared to 51 in July 2014.

NAEA also report that the number of residential properties available per member branch has not risen above 60 since May 2013.

So it is worth digging deeper, beyond the doom laden headlines, when trying to assess what is happening with the UK residential property market, and it is wise to also examine the regional property data to discover what is really happening more accurately.

The only thing that will satisfy would be property purchasers is doing thorough due diligence on a chosen property, if the price is competitive within its local surroundings then it could be a good buy, providing that any repair and maintenance work comes in within budget.

Always attempt to buy the worst property in the best streets because it is possible to add value quickly and effectively just by renovating the obviously tired and run down elements of the property.

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