Tuesday, Jul 21, 2009
The Whacky Whacky World of the Rightmove Index
Write About Property: UK House Prices in Steady State for 2009 Says Rightmove, What?
People, this is asking prices! And not asking prices on the whole, but of properties as they are added to the site. How can we use asking prices of newly marketed properties to forecast what house sold prices will do? In my view we can't. Maybe the Rightmove index would be a better indicator if vendors were being realistic about their asking prices, but according to industry experts they aren't.
Posted by problem pete @ 11:31 AM (1436 views) Add Comment
27 Comments
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1. mrflibble said...
The Rightmove Index has its place, but it is purely an optimism barometer at the minute...
It's useful to have though to measure seller delusion ;-)
2. bluebeach said...
But they are selling though.... Maybe the buyers are deluded too eh :O(|)
3. Problem Pete said...
Bluebeach?
Yes, realistically priced properties are selling because supply of realistically priced property is so low. Rightmove itself says that properties are added at a high price and then come down and down and down until they sell.
Where did your comment come from, an open but they are selling though - what?
4. mrflibble said...
They are indeed bluebeach, flying off the shelves, apparently...
Every fantasy needs a willing partner, unless it involved a tube sock *lol*
5. str 2007 said...
The summer rush should be at an end soon as the holidays start.
Another flurry in September early October for people to be in for Christmas maybe, but I will be amazed if any further rises continue after that until next Spring, by which time I think more evidence of the true state of the economy & debt will have surfaced to put a dampener on things.
6. Bluebeach said...
what's a tube sock?
7. This comment has been removed as it was found to be in breach of our Blog Policies.
8. bluebeach said...
what is a tube sock?!? (sorry but this will appear 3 times in my rush to enquire Ha!)
9. uncle tom said...
Stop, look, understand - what is really happening out there?
Some people want to move house. Some people need to move house. For those established on the housing 'ladder', all things are relative; if you are not in negative equity, you can in theory, play. You may get a little less for the house you are selling, but you will also pay a little less for the house you are buying - there is some balance.
However, in any moving chain, there are two significant players; the person who is selling, and has no need to buy at the same time, and the person who is buying, but has nowhere to sell - the ends of the respective chain.
The forward end of the chain is not the problem - it's the tail that is the issue. House prices are still much too high for most market entrants, so there are more people wanting to be at the front of the chain, and nothing like enough at the back.
So how are people getting round the problem?
Well, some people are being extremely unwise; they are buying another house before they have sold their old one.
Some are still trying to sell their old house, and some are trying to rent it out; take a stroll where you live, it's not hard to spot recently vacated, empty houses.
It gives the impression that the market is recovering, when it is not. The people going for double mortgages will soon struggle to keep up the payments, and the lenders will come to realise that the default risk is very high, when people are minded to pursue this route.
The important detail is that however long it takes the lenders to realise the inherent danger associated with this practice, it cannot prop up prices indefinitely.
They must and will fall to a sustainable level.
10. greenshootsandleaves said...
Mr bluebeach@2 said: 'But they are selling though....'
There you go again! I do not recall anyone claiming that sales had dried up altogether. We're just trying to establish where exactly they stand in relation to last month, last year or whatever, and for that you need something a little more precise than the RM index, especially if the month-on-month changes are so minute. I can understand a radio station wanting to know what people's favourite tunes are BEFORE they go out and buy the CD or download the track, but property? Look at the graph on the home page. Any evidence there of a monthly see-saw pattern? Waves spanning a decade, more like! By all means have your RMI! It may perhaps enable you to buy into the next bubble a month ahead of anyone else but, before you take the plunge, why not test Miles Tubthumper's predictions past and present against something that is less prone to industry bias? Coming back to the radio stations, they don't rely on statistics produced by record companies, do they?
11. tenant super said...
At the weekened I saw an old friend I hadn't seen for a while. She's moved to a rented property in Surrey with decent schools because her son will be starting nursery soon. She has rented out her old flat in London because they can't bear to sell it for less than it was valued at a couple of years ago. I suggested it might be an idea to sell now , whilst they are not in nequity, especially since her IT husband hasn't secured a new work contract and his current one expires soon. "We know it isn't going to reach 2007 prices again but we're waiting for it to pick up a bit more" she said . . .
There's no point trying to warn people like this of the impending second log-flume drop, you're just seen as either jealous, wishful or simply trying to p**s on their bonfire for the sake of it.
12. bluebeach said...
Mrs Greenshootsandleaves @ 7.. there seems to be a great deal of SOLD tags on RM properties in my area... Are they allowed to make this up?
13. luckyjim said...
It's interesting that the validity of the various indexes is only questioned when they point the 'wrong' way.
Uncle Tom gives good advice - stop, look and understand what is going on. Don't just ignor the evidence because it doesn't fit your desired outcome.
Having said that, I don't think the practice Uncle Tom describes is widespread enough to cause this movement in asking prices. But better to try to understand and react accordingly than to simply stick your fingers in your ears and refuse to listen.
14. brickormortis said...
Bluebeahc, I have noticed more sold signs in Oxford than there ever were in the boom. Is there regulation on how long "Sold" signs can be up for and how long you can advertise a house as "sold"? I think there is some serious trickery going on here!
15. george monsoon said...
for bluebeach...
A tubesock is a sock with no defined heel.. i.e. its just a long tube sewn up at the toe............
16. bluebeach said...
Thanks George... I understand now..... not!!! I now agree, many of the posts above are correct for my area.... SOLD or UNDEROFFER has been tagged to many houses on RM for too long... this very much boosts their index.
17. mark wadsworth said...
@ Uncle Tom "Well, some people are being extremely unwise; they are buying another house before they have sold their old one." From my sort of extended circle of friends, I have heard this so many times, they will either buy or rent their new place and rent out the old one "until the market recovers". Madness.
In my area, "SOLD" signs go up very quickly, and then come down again after a few weeks to be replaced by a "For Sale" sign again, from the same or a different estate agent. I've seen this three or four times on the dozen or so houses for sale on my walk to the tube station.
18. bellwether said...
It's a blip without volume.
Doesn't matter if you already own a £500k property and looking to move up, you ultimately depend on a new entrant to the market completing the chain that finances your property. FTB income which was barely enough to buy property during the boom, is being crushed in the recession. This will only end once FTB (with their diminished salaries) can buy in numbers.
Because of the relative lack of income to sustain prices, prices would have collapsed without the global economic implosion. The implosion simply means it is a done deal sooner rather than later.
19. gone-to-colombia said...
In all this talk of house falls or rises it's important to screen out the white noise of VI, spin and attendant punter comment to focus in on the central facts of our combined economic position. These are - swiftly rising unemployment, reluctant lending banks, record personal debt and a world recession that is far from being turned around.
With these in mind consider the plight of the UK housing market, it's on a long slow decline. There may be occasional bumps on that road down but of the general direction there can be little doubt.
20. jack c said...
As a bit of a follow up to the (excellent IMO) comments made earlier on this thread by Uncle Tom - Research from moneysupermarket.com shows the average first-time buyer needs a deposit of £32,000. Its research also shows that 16% of first-time buyers are considering taking out a loan to cover the cost of the deposit"
Full article @ www.mortgagestrategy.co.uk/cgi-bin/item.cgi?id=190301&d=403&h=401&f=402
21. peter_2008 said...
The fact is even though we wear suits, use i-phones and drive cars, our mentality remains exactly the same as the cavemen 10,000 years BC.
We can only see, hear, learn, believe and trust what is happening to our little caves.
Most of us refuse to listen to people from other caves. Most of us don’t want to believe there is a bigger world outside of our own caves. Most of us fanatically have faith in that "our cave is better placed than others", because the elders say so.
When the cave collapses, most of us will just stay there and die rather than stepping out from the cave, because most of us just don’t know how to live outside of our little caves.
People who are buying houses now, not because they looked rationally at the bigger picture, they are doing it because sadly that’s the only thing they know.
22. flashman said...
Where I live, houses are selling very quickly. There are minor bidding wars and people are not having to leave their old houses empty. It is not an oddity or a fluke. People want the houses and they can afford them. I have not got access to the figures at the moment but I would not be surprised if unemployment in Surrey is under 5% and under 2% in my immediate locale. Another thing worth mentioning is that prices in my very small corner of the world (Surrey Hills) have not fallen at all. They will only fall when and if people can no longer afford the houses. I think the Rightmove figures represent reality. It is not in their interest to fudge them because they will then have to make a big realignment down the road, which will cause them to lose credibility
23. jack c said...
@flashman - I love your last line (the idea of an EA having credibility)
24. greenshootsandleaves said...
bluebeach@12
Although Mrs greenshootsandleaves and I see no eagerness on the part of EAs to remove sold properties from RM, even where the sale went through many, many moons ago, perhaps to drive home the point that it's a genuine sale and not another 'Sold STC' that fell through, we would have no problem with there being a real increase in activity (other than to wonder where the finance came from), it's just a question of turning perceptions into verifiable statistics. We would then be able to gauge whether we're dealing with a predominance of cash sales (not really a springboard for a return to 2007, when you think about it) or a truly astounding recovery: 'The recession that never was'.
25. bellwether said...
Flash not the first time you have advanced this point but if you look at Surrey as a whole you will find volumes down about 70% from peak.
I'm not disputing that Surrey is a nice place, but then it has always been a nice place and was a nice place 10 years ago when houses were selling for 40% of what they are selling for now. Incomes in the area have not more than doubled in that period and indeed incomes in the area must now be shrinking because london and the income of the professional classes is shrinking like everywhere else, I'd argue more so.
26. flashman said...
Volumes are down because less people are willing to sell. That's very different from less people being willing or able to buy. Like I said earlier, local unemployment is very low and earnings are still relatively high. Even if things have come off the boil a bit, it still feels more like a boom than a bust. I'm afraid I might be about to turn bullish.
There is a phenomenal technology revolution that is beginning to ignite and I want some of it. The economic crisis has made the ground very fertile and governments are starting to think about strategic investments and incentives. Almost every day, I hear about some exciting new technology or project. The Nissan battery story is a good example of how the ground can become more fertile after a forest fire. People always talk about busts following booms but it goes two ways
27. bleakhouse said...
Rightmove put in the small print the decline in prices that properties already listed are suffering. And if you take a property off the market it often comes back as 'newlly listed'. Thus a house newy listed for £1,100,000 last year is back on the market for £795,000 this year. Since £795,000 is a great deal higher that most houses it puts up the asking prices. I would suggest that quite a few overpriced houses have been returned as newly listed, still over priced.
What I do notice is a decline in the number of houses listed. A HIPS is only valid for one year, after which you must get another one to legally offer your property. I wonder if some houses are taking more than a year to sell.
Can one find out the number of HIPS issued per month.?