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Key Worker

Renovatioin And Developers

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In the area where I live there is still a lot of activity by developers and renovators who appear professional - not just house owners dong 'changin rooms'. A house near me has been gutted and put together again, for example. Skps in other street nearby give testament to activity elsewhere. Land Reg figures show 50% rises in a matter o months, which are quite anomolous.

My point is - when sales are achieved (and it appears from LR that there ARE sales at 'good' prices) this must give a false boost to the house price survey averages. Prices have not actually risen as a result of movement in the market. Instead, value has been added to the housing stock through development. Leaving aside the rate of return which developers get, the 'rise' in prices in these cases DO NOT reflect rising house prices (in the sense of price movements depending on sentiment and the wider economy and people's view of housing as an investment). In the case of the houses which are gutted, the value which is added and the local adjustment to average prices can be very significantj (especially when there are low volumes).

What do others think?

Edited by Key Worker

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In the area where I live there is still a lot of activity by developers and renovators who appear professional - not just house owners dong 'changin rooms'. A house near me has been gutted and put together again, for example. Skps in other street nearby give testament to activity elsewhere. Land Reg figures show 50% rises in a matter o months, which are quite anomolous.

My point is - when sales are achieved (and it appears from LR that there ARE sales at 'good' prices) this must give a false boost to the house price survey averages. Prices have not actually risen as a result of movement in the market. Instead, value has been added to the housing stock through development. Leaving aside the rate of return which developers get, the 'rise' in prices in these cases DO NOT reflect rising house prices (in the sense of price movements depending on sentiment and the wider economy and people's view of housing as an investment). In the case of the houses which are gutted, the value which is added and the local adjustment to average prices can be very significantj (especially when there are low volumes).

What do others think?

I think the numbers may be too small, but what is certain is that over time th econstant renovation and maintenance of houses makes them a much poorer investment than most would like to admit. This has been discussed with figures by me amonst others before here (yeah, I used to post serious sh!t with numbers and all). Perhaps a search under renovation or some such might unearth it (or cost of ownership).

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I think the numbers may be too small, but what is certain is that over time th econstant renovation and maintenance of houses makes them a much poorer investment than most would like to admit. This has been discussed with figures by me amonst others before here (yeah, I used to post serious sh!t with numbers and all). Perhaps a search under renovation or some such might unearth it (or cost of ownership).

Fair enough. But there does seem to be quite a LOT of this going on, slow-down or not. For example, 25% rise in price in 6 months on one house; another house developed and smashed the street's ceiling price by around 15% (very nicely done - I looked round it - a 2-bed 'converted' to a 3-bed); and over 10% added on another house in 9 months.

When Halifax/Nationwide report this, they are just reflecting the value of the renovation plus the developer's return on his time/labour/risk.

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I think the Nationwide and Halifax indices attempt to account for some of these changes eg. if a homeowner adds a 2nd bathroom for example, then the house would move into the '2 bathroom' category and be assessed against similar properties.

This whole topic is known in economics as hedonics and concerns the importance of assessing how the quality of an item has changed, as well as its price. It forms a core part of the debate regarding the 'core' inflation rate in the economy - for example if a £1,000 laptop today has twice the power of a laptop that cost £1000 a year ago, has it halved in price or stayed constant?

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I think the Nationwide and Halifax indices attempt to account for some of these changes eg. if a homeowner adds a 2nd bathroom for example, then the house would move into the '2 bathroom' category and be assessed against similar properties.

This whole topic is known in economics as hedonics and concerns the importance of assessing how the quality of an item has changed, as well as its price. It forms a core part of the debate regarding the 'core' inflation rate in the economy - for example if a £1,000 laptop today has twice the power of a laptop that cost £1000 a year ago, has it halved in price or stayed constant?

Very interesting. Thanks for your thoughtful replies.

I didn't realise the Halifax/Nationwide stats were so sophisticated. I must say in the Land Reg stats I have come across contain many errors, eg. a terraced house recorded as semi-detached when I KNOW it is terraced.

On a slightly different note, people may be interested to know that the Land Reg figures EXCLUDE what the solicitors call an ALLOWANCE. eg. seller agrees to a last minute reduction in the price to pay for work that needs to be done, but this is written onto the contract (sometimes just a handwritten note in the margin apparently) and is NOT reported to Land Reg. Don't know about the legality, but I KNOW this happens.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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