As a nation, we are obsessed with many things.
The most obvious one is the weather; the default topic of conversation between any strangers. We just can’t get enough; whether it’s too cold, too wet, too hot, nice for this time of year, we just can’t stop going on about it.
For the male half of the country, and for plenty of women too, football is also an issue bordering on the psychotic, while on the other foot so to speak, is the ladies’ fixation with shoes.
But for large swathes of the national press and middle Britain, the subject of house prices is constantly on the mind. Any hint of a movement up or down is splashed across the front pages as the next boom or bust cycle, especially in recent months, where the spiral upwards that has taken place over the last few years looks like it is finally running out of momentum.
A national psyche problem
As Charles Kennedy, former leader of the Liberal Democrats, recently remarked on BBC’s Question Time, the housing market is a ‘national psyche problem’, where ‘we are obsessed with home ownership’.
Fuelling this obsession there are a number of different indices from a variety of sources, from lenders and estate agents to the government, which invariably contradict each other and cause even more debate, while you also have indices for the national level, regional levels and rural areas, among others.
However, with all these indices, how can you get the most accurate picture of what is happening in the market?
A different animal
One factor working its way through the industry’s psyche is that there is no longer such thing as the UK housing market. The North/South divide is a phenomenon that has been well documented, but most people are now aware that what happens in neighbouring or similar areas can be very different.
People are also beginning to come to terms with the impact which London – and to a similar extent Northern Ireland – has had on the average UK house price in recent years. The massive growth in these markets has helped to mask downturns in other areas of the country, which have been going on for a number of months.
As television presenter, Kirstie Allsopp, commented on the same Question Time programme, “It’s very difficult to examine the state of our housing market when you have this unique city [London] at the centre of it. That is why I think we should exclude London from the indice data.”
As Paul Fincham, head of retail media relations at Halifax, insists, regional analysis should give the greatest idea of what is happening.
“We publish UK data, regional, local authority and by postcode figures, but you can’t really go further down than that, say to an individual estate or street, as you can’t get a decent sample size. House price indices are intended to give a broader view of trends, but while UK indices give a good picture, a regional look usually gives you the best indicator of your area.”
Property types
However, what about different property types? For example, email4property recorded 9.2 per cent house price growth in Bristol in 2007.
However, while sales of terraced houses grew to 43 per cent of the market, the number of flats sold fell by 33 per cent. Therefore, can house price indices cope with incorporating the difference in sales of flats and houses, which could make a fundamental difference to the figures and buying decisions?
It must also be remembered that while local conditions play a role, there are general issues which impact on the whole housing market.
As Fincham highlights: “The key factors which affect support for a market are the same at a local and national level: the economy, supply and demand and inflation. These impact on everyone.”
Unique factors
Ultimately, no one house price index can give a comprehensive view of the market which picks out every trend, from a small town right up to a national level.
On the whole, housing conditions are extremely localised and that is why property professionals, such as surveyors, estate agents, mortgage intermediaries and financial advisers, are in a prime position to judge the unique factors present in that market.
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