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Rightmove's Calculation Of Average Prices

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Recent threads on Rightmove's press release claiming average asking prices had increased to 200K raised issues concerning how this average was calculated. Of particular concern to me was how portfolios are treated in their calculations. With so many portfolios on their site one can imagine the figures would be seriously skewed if, for example, portfolios valued at £1M were treated as one property.

I emailed raising the issue.

Sent: 21 February 2006 22:42

To: talk-to-us

Subject: Sale of Portfolios

Dear Sir /Madam

I read of your pending flotation and the press quoting Rightmove claiming asking prices are now averaging £200K+.

I'm interested in how you treat portfolios when calculating average prices.

Do you treat a portfolio as one property, or do you divide the portfolio by the number of properties it contains and attach an average price to each property within it? Or do you find out from the vendor the market price for each individual property within the portfolio?.

If you treat the portfolio as one property, can you please justify such a course of action?

Thank you for your time.

Regards,

Their reply:

Hi,

I'm not sure I follow your query. Could you clarify what you mean by 'portfolio' - I do no see it's relation to our average asking price.

The calculation of our average house price is fairly complex, we evidently know the asking price of every property on site, we use some indexation to ensure that errors and extremities are removed but otherwise each property is treated individually.

I'm not sure I understand what you mean by 'each property within the portfolio'. If you could clarify then I'll endeavour to more directly answer your question.

Alternatively please call me on ********** and I'm sure I can explain further.

Kind Regards

My reply:

Sent: 22 February 2006 12:08

To: talk-to-us

Subject: Re: Sale of Portfolios

James,

Here's a portfolio:

http://www.rightmove.co.uk/viewdetails-694...pa_n=1&tr_t=buy

and another;

http://www.rightmove.co.uk/viewdetails-694...pa_n=1&tr_t=buy

How is a portfolio treated when calculating average asking prices? Do you treat a portfolio as one property? Or do you calculate the average price of each property held within it?

Thanks for your time.

Regards,

Their reply:

Hi,

Oh, I see, didn't realise we were advertising such entities - which strictly speaking should be advertised as commercial ventures.

Anyhow, I'll need to ask the team that produces the index, but on the basis that we have no way of knowing it's a portfolio then we'd treat them as one property. Do remember that we have 670,000 properties on site so the impact on the average is likely to be completely negligible.

However, I take your point and will pass your email to my colleague for further comment.

Kind Regards

There's an equivocal admission portfolios are treated as one property, but the writer is probbaly not certain. I'll keep you posted. The 'team that produces the index' will no doubt extricate Rightmove from this.

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Recent threads on Rightmove's press release claiming average asking prices had increased to 200K raised issues concerning how this average was calculated. Of particular concern to me was how portfolios are treated in their calculations. With so many portfolios on their site one can imagine the figures would be seriously skewed if, for example, portfolios valued at £1M were treated as one property.

This is, IMHO, an excellent piece of research. Will you be raising this to the attention of journalists who have discussed the average asking price figures from Rightmove so that they can (sarcasm) quickly publish corrections to their previous articles?

Billy Shears

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Yes. Andrew Verity is the obvious candidate.

But I shall wait for a reply from the 'team producing the index' before doing so. I'm not taking the writer's admission as proof because I suspect he is not sure how portfolios are treated: he was making assumptions before checking his facts and, worse still, committing them to writing. I'll cut him some slack until we have an official statement from those who really know.

Edited by Baz63

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Baz63

Please also ask why they don't include reductions in asking price within their calculations of their average.

Their calculation consists of properties added to their web site within the previous month. If the asking price of these properties is reduced within the same month, and the property is not delisted and relisted under a new number (few are), they use the initial asking price within their calculation, not the revised price.

If a property sits on their site for a few months and the asking price is reduced one or more times, this reduction is not accounted for within their figures either.

Reduction of asking prices due to lack of interest/affordability/whatever is a perfectly valid trend and I believe they should account for them.

Edit : I emailed Andrew Verity on this subject a few days ago, but not heard back.

Jon

Edited by jon

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Recent threads on Rightmove's press release claiming average asking prices had increased to 200K raised issues concerning how this average was calculated. Of particular concern to me was how portfolios are treated in their calculations. With so many portfolios on their site one can imagine the figures would be seriously skewed if, for example, portfolios valued at £1M were treated as one property.

I emailed raising the issue.

Their reply:

My reply:

Sent: 22 February 2006 12:08

To: talk-to-us

Subject: Re: Sale of Portfolios

I would send this to the BBC pointing out that their news report on the "Surge" in property prices is highly suspect. Watchdog might be interested if the BBC won't touch it which is likely.

Their reply:

There's an equivocal admission portfolios are treated as one property, but the writer is probbaly not certain. I'll keep you posted. The 'team that produces the index' will no doubt extricate Rightmove from this.

I would send this to the BBC pointing out that their news report on the "Surge" in property prices is highly suspect. Watchdog might be interested if the BBC won't touch it which is likely.

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The recent government figures suggest Rightmove's data was incorrect and without any foundation:

http://investing.reuters.co.uk/news/newsAr...IN-PROPERTY.xml

LONDON (Reuters) - The number of property transactions in England and Wales slipped to its lowest in five months in January, tax authority data showed on Tuesday.
HM Revenue and Customs said the number of property transactions fell to 133,000 in January in seasonally-adjusted terms from 154,000 in December, revised from an originally reported 153,000.
That was the lowest level since August 2005 when the Bank of England cut interest rates to 4.5 percent, a move that many analysts said gave a boost to the housing market at the end of last

How can Rightmove's houses be "flying off the shelves" if the number of transactions fell? How can prices be rising if the number one government official's house dropped 625k? (Tony's place).

I have just emailed Rightmove with this:

Re: http://uk.us.biz.yahoo.com/ft/060220/fto02...17891.html?.v=1

We refer to your recent press release concerning the surge in house prices. Some of your properties are listed as portfolios and we wonder if these figures may have skewed the averages? For example:

If this property appeared as a single house rather than a number of houses the average house price will be raised. Our research shows that Rightmove has listed a substantial number of properties that comprise a portfolio together with single properties that appear to be erroneous prices up to 99 million pounds for a small semi etc.
Further, Government data recently released shows that the number of transactions fell sharply in the New Year which seems to refute your data showing a surge in activity:

"LONDON (Reuters) - The number of property transactions in England and Wales slipped to its lowest in five months in January, tax authority data showed on Tuesday.
HM Revenue and Customs said the number of property transactions fell to 133,000 in January in seasonally-adjusted terms from 154,000 in December, revised from an originally reported 153,000.
That was the lowest level since August 2005 when the Bank of England cut interest rates to 4.5 percent, a move that many analysts said gave a boost to the housing market at the end of last year."
As we look at the market with a view to purchasing it is important to know what data can be relied upon as accurate. Are you able to comment on the above and especially the government data which clearly shows transactions are slowing dramatically.
Regards
Further to my last email, here are some more Rightmove listings showing erroneous prices that may have skewed averages:

http://www.rightmove.co.uk/viewdetails-5882941.rsp?pa_n=1&tr_t=buy' rel="external nofollow">
The above are a sample of a number of listings that may well have been included to show prices "surging."
Regards

Anyone hazard a guess as to how many multi-million pound terraces Rightmove have listed? How on earth can their data be relied upon. :blink:

Edited by Realistbear

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Does anyone have any idea how many suspicious listings Rightmove have up on their website? Can you imagine the damage to their credibility if it could be shown that their "errors" skewed the data and that BBC reported it as "news."

HPC field day.

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ATTENTION ALL

£201,6000 average asking price? 628,000 homes?

so 201,600 * 628,000 = £126,604,800,000 in total

To get back under £200,000 we need to wipe off 0.8% or £1,012,838,400 of portfolios.

So if we can find just over a billion quid of portfolios on this site the average price would be under £200,000. If we do this and then contact the BBC stating they are reporting erroneous headlines based on missinformation

http://news.bbc.co.uk/1/hi/business/4724858.stm

(this being the culpable story)

it may force the BBC to be a little more cautious.

I hav no idea how long finding £1billion quids worth of portfolios would take, is it feasible?

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I saw one for 99 million. I do not think we are talking about many examples here. If we can show that the increase was illusory it will be BIG news. BBC will have to report it. VI credibility gone in one swoop. Maybe I should not have emailed Rightmove to explain as they might do a quick removal of the billion pound semis?

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ATTENTION ALL

£201,6000 average asking price? 628,000 homes?

so 201,600 * 628,000 = £126,604,800,000 in total

To get back under £200,000 we need to wipe off 0.8% or £1,012,838,400 of portfolios.

...

Don't forget that the report is on properties added in the month being reported on. So it's an average of a much smaller number of properties than the total 628,000.

T&T

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I've had the same banter with Rightmove too..

Firstly, they have changed which data they use. They previously excluded 'atypical' (expensive) properties, there is now no reference to this and rightmove won't give me a straight answer. (see my original thread on this).

I also emailed the BBC with a complaint and they replied with "prove your serious alligations". Of which I did, no reply from them.

Jon,

I also asked Rightmove several months ago why do they use the initial price rather than the average price at any one time. Basically, they don't want to change their index.

Also, would you concur with Rightmove's figures Jon (as you have a super tool thingy)?

While we are on Rightmove... I also asked about "Reduction" tags. I was told they were removed because of technical difficulties. In hindsight Zorn probably told the big cheese it was a bad idea. However, they did say they will be bringing this feature back! - Of which I very much doubt.

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Guest The_Oldie

Noen of these links work--someone removed them---quick????

They worked a few minutes ago. Did anyone take a copy?

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What happens with multiple listings for the same property? Either through a mistake or multi agents?

Don't think that would have much of an effect.... unless the property was either at the top or the bottom of the price range.

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They worked a few minutes ago. Did anyone take a copy?

They're also still in the original pinned Rightmove thread. Must be something in the way I c+p'd them :unsure:

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I've had the same banter with Rightmove too..

Firstly, they have changed which data they use. They previously excluded 'atypical' (expensive) properties, there is now no reference to this and rightmove won't give me a straight answer. (see my original thread on this).

I also emailed the BBC with a complaint and they replied with "prove your serious alligations". Of which I did, no reply from them.

Jon,

I also asked Rightmove several months ago why do they use the initial price rather than the average price at any one time. Basically, they don't want to change their index.

Also, would you concur with Rightmove's figures Jon (as you have a super tool thingy)?

While we are on Rightmove... I also asked about "Reduction" tags. I was told they were removed because of technical difficulties. In hindsight Zorn probably told the big cheese it was a bad idea. However, they did say they will be bringing this feature back! - Of which I very much doubt.

A story this "HOT" will not be touched by the BBC--The Telegraph might be interested as they know HPI is the only thing keeping Gordon going. The Tabloids would love it but their credibility may not be as strong.

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The thing is that Right move had shown negative monthly figures for 16 months or something and then suddenly showed a massive increase this could be because it really jumped or because they have changed the way they calculate the data. As Teddyboy pointed out in another thread one region showed a 6.7% leap in a month - annualised this would mean house prices doubling in a year :)

I don't think portfolios etc are the reason for this sudden change it must be something more fundamental.

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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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