I was just reading a survey which reveals that property prices increased by 0.3% during January 2011.
Wow, finally a bit of good news! But then I looked a little closer.
The problem is that these figures are of little help to those tracking real property price movements. Apparently it is the UK’s most comprehensive property survey, based on data from over 400,000 properties across the country. But its data is based on asking prices.
The asking price, as most consumers know, is often nothing like the sale price of a home, with properties regularly selling for much more or much less than their original price.
While it may be interesting to track how asking prices are rising or falling over time, this has nothing to do with actual residential or commercial property values. I regularly see houses on the market that are asking an easy 30% premium and as such will never sell, but they will skew the figures.
This means the claim that the average property value in the UK is £215,846, is a touch misleading. It is not the average value at all, it is the average asking price sellers wanted for their homes across the UK during that month. Moreover, the January figures do not show the first increase in house prices since October 2010, they show the first increase in average asking prices.
In its most recent house price survey, Halifax said the price of the average UK home was £164,173, while Nationwide puts it at £161,602. Both use figures based on mortgage approvals, which is the only way to check on house prices.
Nigel Lewis from a web based property company is perfectly entitled to say ‘with prices still 0.4% less this time last year our current feeling is one of cautious optimism’, but it would be better if he referred to ‘asking prices’ to be clearer.
So remember, there are lies damned lies and statistics. Always be careful when reading survey reports.
