Musings of a London Property Search Agent

According to house price data released by the Nationwide Building Society average house prices across the UK have dropped 8.1% in the last 12 months.

Nationwide don’t publish monthly regional prices to the same depth as the Land Registry, which is one of the main reasons we concentrate on those of the latter. Prices and the housing market in general can vary enormously across London and in different corners of the South East, both of which have a tendency to out-perform the rest of the market.

The Nationwide methodology differs from that of the Land Registry in two fundamental respects. Firstly, the Nationwide index is based on prices at the time of mortgage approval, post survey, whereas the Land Registry index is based on actual sold prices. This means the Nationwide index is arguably more responsive to the market, but some people prefer to use the Land Registry, because ‘you can’t argue with a ‘sold’ price.’

Secondly, Nationwide have developed a statistical ‘mix adjusted’ system which essentially means they track representative house prices over time, whereas the Land Registry takes a simple average. Nationwide have adopted the system they have to ensure their prices are not South East-centric and to avoid excessive activity in a given location or a particular section of the market artificially altering the results.

The flaw with this system is that different parts of the market inevitably perform differently and if you are not really interested in the whole market but only the micro-market in which you intend to sell or buy, it is of limited value, although note the responsiveness issue above. The Land Registry report published earlier this week showed that sales of homes worth over £2million are down significantly less than lower value property. It also showed which London boroughs are outperforming the London market at the moment – details which are of use to the home-buyer.

The two indices have different aims and should therefore be read differently. In her report Chief Economist Fionnuala Earley stated that estate agents are reporting that 40% of sales are falling through at the moment and quoted the Bank of England Agent’s report published yesterday which suggests that this is partially because vendors are unwilling to accept low offers.

Is it a leap too far to surmise that vendors accept a low offer goaded on by their estate agent who persuades them that if they are moving up they will be able to save even more on their next house, only to find the vendors of their dream home unwilling to negotiate to the extent they need? These low offers which don’t necessarily proceed to sales may then contribute to the Nationwide’s statistics.

If that’s what has happened to you, you may be best to back out or purchase from a distressed vendor – there aren’t as many about as you might think from reading the press, but this London Property Search Agent can help you find them if you decide to proceed with your sale.

Technorati Tags: House Prices, London House, London Property Search Agent, Nationwide House Price Index

Tags: House Prices, London House, London Property Search Agent, Nationwide House Price Index

Musings of a London Property Search Agent

The Evening Standard carried a story today quoting a report from City Credit Analysts Standard & Poor’s, stating that house prices will slump by a further 17% and that 1.7million home owners will be plunged into negative equity.

Standard & Poor’s credit analyst Andrew South said: “”The downward trend in UK house prices now seems well established and we expect prices to continue falling in the near term,”" The Evening Standard reported.

What is interesting is that nearly a year on from the beginning of the credit crunch in August last year, the Land Registry only reports average house prices are down 0.89% in London and 0.44% in the South East. The whole of England and Wales has only gone down 1.1% according to Land Registry figures. Yet a huge number of experts have been predicting annual drops of c. 20% – 40%, since last year. That means we should be down 20% or more already doesn’t it?

It is certainly true that a number of home owners are accepting price reductions of 20% and more but if the whole market was affected the way it has been reported for the last 11 months, the beginnings of significant price deflation would show up in the Land Registry statistics.

The point that no-one ever seems to mention is that although buyer numbers are down by c. 40%, supply is also down and in some cases vendors would rather rent or stay put than sell for significantly less. So a great deal of supply has been removed from sale this year. Which means that although it’s certainly easier to buy a property for 20% – 50% less than the vendor wishes to sell for at the moment, it’s difficult to see any evidence of a house price crash, house price slide or house price slump in monetary terms. We are in the middle of a slow market, granted. Vendors will find it difficult to sell. But we would call drops of 0.89%, 0.44% and 1.1% in 9 months a flat or slightly depressed market. What would you call a 1% change?  This London Property Search Agent is waiting to hear from you.

Technorati Tags: House deflation, House Prices, London House Prices, London Property Search Agent, London Supply and Demand, Supply and Demand

Tags: House deflation, House Prices, London House Prices, London Property Search Agent, London Supply and Demand, Supply and Demand

Musings of a London Property Search Agent

The National Housing Federation, the organisation which represents independent not-for-profit housing associations in England published a report yesterday predicting house price growth of 25% in England by 2013.

Federation Chief Executive David Orr said: “”Our report shows that despite concerns about the current housing market downturn, house prices will increase substantially over the mid to long term.”"

“”Demand for housing is going up, while the supply of new homes is going down. This means that as soon as the economic outlook improves house prices will resume their previous upward trajectory.”"

“”People are living longer, they’re delaying getting married and they’re more likely to get divorced €“ meaning we now have more households than ever.”"

He added: “”It’s clear that even with house prices falling, affordability hasn’t improved one iota. In recent months, we have seen mortgage arrears increase, the number of repossessions grow and new mortgages become more difficult to acquire.”"

We have been confident about the long-term prognosis for property in London and the South East throughout the credit crunch because of the lack of supply and increasing demand. According to the report, price increases in London will be 18% and a whopping 62% in the South East region as a whole! Great news if you live in the Home Counties!  If you want to move to a property in the South east this london Property Search Agent is waitng to help you.

Technorati Tags: House Price Increase, House Price Rises, house supply and demand, London Property Search Agent

Tags: House Price Increase, House Price Rises, house supply and demand, London Property Search Agent