“There are three kinds of lies: lies, damned lies, and statistics.”
This old adage has been attributed to Benjamin Disraeli and has also been quoted by Mark Twain, but whoever came up with it understood the power of numbers.
Any figures quoted can usually be disproved by some other correlation and when talking about property there is often disagreement between two of the biggest sources – the Halifax and the Nationwide who both bring out their own reports.
The annual change by the Halifax is calculated as an average for the latest three months compared with the same period a year earlier.
They consider that these figures provide a better picture of the underlying trend compared to a monthly year-on-year number as they smooth out any short-term fluctuations.
The Nationwide use a similar system, but Nationwide house prices are mix adjusted – i.e. they track a representative house price over time rather than the simple average price.
Now, there is a new ‘kid on the block’ with the new House Price Index which is a combined report from the Land Registry, its equivalents in Northern Ireland and Scotland, as well as the Office for National Statistics.
Some points to note are:
– the inclusion of both cash sales and new dwellings in calculations to provide full coverage of the housing market
– the use of a more appropriate calculation of average price that is not as sensitive to extreme valued property
– a calculation process that ensures the price index is representative of the current housing market
– publication of average prices that are fully comparable over time.
Its first report came out in June and it makes interesting reading.
For April 2016, it reports that:
– the average price of a property in the UK was £209,054
– the annual price change for a property in the UK was 8.2 percent
– the monthly price change for a property in the UK was 0.6 percent (April)
This first report talks about “indications of a cooling in the market in April 2016” following the changes to stamp duty rates.
The timing of the stamp duty tax does appear to have cooled demand in April compared to March nationally, but this had followed a period of increased activity up to April 1, so it’s not clear whether the drop marks a significant change in the property market or not.
Recently the Halifax have reported the annual increase in house prices was around 9.2%, but the House Price Index say 8.2 percent and Nationwide say 4.9 percent, so who is right?
Well, often the rate changes according to whether house prices are paid for with mortgages or cash only etc. – so they probably all are. However, for us in the South West, the average annual increase over the last year was more like 6 percent.
What do all these figures tell us? Well, apart from the fact that houses are costing more now than they did last year, in order to make any significant assumptions or deductions on the general state of the property market, it might be prudent to wait until we have some more information as Brexit may well have skewed the figures going forward.
Shona Ford is senior negotiator at Winkworth Marlborough
