Asking Price Data Steals a March on Sales and Loan House Price Indices

The UK's most well-known house price indices are misguiding buyers and sellers by publishing out-of-date statistics while asking price analysis is reporting key property market changes a year (or more) ahead of those based on antiquated methods involving loan and sales data.

'Steering via a rear-view mirror' is inadvisable but that's exactly what buyers and sellers do when they inform themselves via the laggard big name indices, such as those released by lenders Nationwide and Halifax. This fact has been brought into sharp focus over the last 12 months by comparison of the various analyses published on the Greater London property market.

As early as December 2016 Home.co.uk's Asking Price Index reported that the capital's average price had begun to decline year-on-year, by -0.4%.

Similarly, Rightmove's index, which is also based on asking prices, reported an annual fall in the capital's house prices in December 2016, by -0.1%.

But lagging far behind these measures is Nationwide, which has taken a year to come to the same finding. The lender's December 2017 released report, for the final quarter of the year, said that prices had slumped by -0.5% year-on-year. But back in December 2016 Nationwide was still reporting that prices in the capital were rising, by 3.7%.

A factor in this delay is that Nationwide's index is based on mortgage approvals, which takes far longer to gather and fails to identify the very latest trends that asking price indices such as Home.co.uk's are able to.

Meanwhile, the Halifax, another lender to base its house prices on mortgage approvals, is also identifying London price trends far later than those based on asking prices. In January 2018 it is still reporting a rise in the value of the capital's properties, by 1%, although concedes this is the slowest increase for six years.

House price indices based on completed sales fare little better against the timeliness of asking price research.

LSL Acadata, which uses actual price paid data, has only detected annual falls in London property prices since October 2017, when it revealed prices had dipped by -2.6%. Its latest data, from November 2017, reveals a -4.1% fall in the capital's prices, a far cry from its December 2016 figures, which revealed a 6.6% rise in London prices.

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

When to buy is such an important consideration and the problem with relying on such out-of-date data is that it can give a misleading impression of the state of an area's property market.

Another problem with more well-known indices is that they often fail to include marketing times and stock levels, two other excellent, forward- thinking indicators of the market.

Home.co.uk's latest Asking Price Index, released this month, is recording a fall of -0.9% in London property prices and its supply and Time on the Market figures indicate further falls are likely into 2018.

In January 2018 there were 54,833 properties for sale in the capital, up 8,254 (17.7%) on January 2017's figures. It seems likely that this increase in supply will soon have a further negative effect on London prices.

Similarly, Home.co.uk's average Time on the Market figure for January 2018 of 160 days also gives cause for concern regarding further price falls as this is 15 days longer than January 2017's figure.

With such up-to-date evidence now available it looks like the more well-known house price indices will continue playing catch-up throughout the year.

Home.co.uk director Doug Shephard says: "Investors seeking capital gains need to time their purchase very carefully. 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.

"Here at Home.co.uk we are identifying new tops and trends in the market many months before the other indices report the same. 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, 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."

Source: Home.co.uk Asking Price Index

Notes for Editors

Over the last 28 years, Home.co.uk has become established as a dynamic, innovative and ethical service. By providing the UK's most comprehensive Property Search and Estate Agents directory coupled with detailed House Price analysis, Home.co.uk delivers the real power of the Internet to inform and empower estate agents, homebuyers, renters, landlords and sellers in across the UK.

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