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.