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kingofnowhere

Rightmove Odpm

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Hi

Rightmove are about 4 months ahead of the ODPM. Rightmove monitors properties coming onto the market and ODPM monitors the sale price. IE when the sale is completed

Rightmove is abou 3 months ahead of ODPM

Righmove in Dec had HPI at 3.4% , ODPM for March had 3.3%, so things agree, in fact they agree more than I would have expected becuase of the different methods.

Since Jan Rightmove prices have grown 6.9%, so it would be reasonable to assume that for the next few months ODPM will be showing fairly large MoM increases.

Here is the timeline for housing transactions from the BOE

houseBOEtimeline.gif

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Errrrrr, No because Rightmove is nothing to do with actual sales and is simply asking prices.

Where I am in SE London, asking prices have risen in the last 2 or 3 months, but the market has stalled badly once again now.

There is mounting stock and very, very little seems to be moving.

I would therefore be looking to see Rightmove going negative in the next few months as people reduce their prices in an attempt to get some interest.

Edited by BubbleTurbo

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I can see what you're trying to show, but the problem is Rightmove's index is fundamentally flawed. Rightmove use initial asking prices for a start!

I do think there will be more months of positive growth until the summer, but I think it will all be undone when interest rates go up - which look set to happen this year.

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I have to agree with KoN – whatever your feelings about the quality of the data, it’s still important to correct for the relative time lag between the different sampling positions along the timeline. In addition, I like shift the YoY back 6-months and the QoQ back 1.5 months to better reflect the central point of the difference formulas.

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1) The timeline is shorter these days, from advertising to selling. Compared to 1998 when the survey was done.

2)Rightmove isn't fundementally flawed, however you much you would like be. It corresponds with the other data.

Jan 2002 Jan 2005 ODPM 56%, Rightmove 60%, Land Reg 62% Nationwide 69%, and Halifax 72%

So rightmove is pretty spot on the ball, as it has the same Mix adjustment as ODPM and land Reg, compared to Haliwide which actually take into account many more factors, such as bedrooms, garages, land etc etc, and so will reflect higher HPI due to the trend of cheaper properties selling in a rising market, and that new build are getting smaller.

Edited by kingofnowhere

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You might as well have hometrack as well

Since Jan 2002 According to them UK prices have gone up 15%

Why's that one so far from the others then?

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Because, its survey based, "What have house prices done in your area over the last month?", and I think people (EAs) tend to underestimate HPI.

Surely not. I'm told they're all VIs whose main purpose in life is to ramp prices and annoy HPC members... :rolleyes:

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Hi

Rightmove are about 4 months ahead of the ODPM. Rightmove monitors properties coming onto the market and ODPM monitors the sale price. IE when the sale is completed

Rightmove is abou 3 months ahead of ODPM

Righmove in Dec had HPI at 3.4% , ODPM for March had 3.3%, so things agree, in fact they agree more than I would have expected becuase of the different methods.

Since Jan Rightmove prices have grown 6.9%, so it would be reasonable to assume that for the next few months ODPM will be showing fairly large MoM increases.

Here is the timeline for housing transactions from the BOE

houseBOEtimeline.gif

Am I not right in thinking that your theory only holds good if prices are only moving in one direction? For example, if there really was a change in sentiment over the coming few weeks and prices actually moved against the trend, then the relationship between the two sets of figures would surely break down.

I suppose I'm just stating 'the bleeding obvious' because, otherwise, we'd have to believe that whatever the vendors ask for their properties will be achieved, come what may. That would be ridiculous, would it not?

p

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Am I not right in thinking that your theory only holds good if prices are only moving in one direction? For example, if there really was a change in sentiment over the coming few weeks and prices actually moved against the trend, then the relationship between the two sets of figures would surely break down.

I suppose I'm just stating 'the bleeding obvious' because, otherwise, we'd have to believe that whatever the vendors ask for their properties will be achieved, come what may. That would be ridiculous, would it not?

p

You'd be right if a large external shock changed sentiment very rapidly, as in that case asking prices would not give advance warning.

But if sentiment changes steadily, the figures should still pull roughly together. In a buyers market, the %age of asking price achieved as sale price does fall, but only by a few per cent, and the direction of price movement (up, down or level) is likely to be flagged in advance by asking prices. It's not assuming that people get their asking prices, it's assuming that the % of asking price achieved is reasonably constant, and that the fall in this % as the market turns downward is less significant than the overall correlation between the indices.

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Hi

Rightmove are about 4 months ahead of the ODPM. Rightmove monitors properties coming onto the market and ODPM monitors the sale price. IE when the sale is completed

Rightmove is abou 3 months ahead of ODPM

Righmove in Dec had HPI at 3.4% , ODPM for March had 3.3%, so things agree, in fact they agree more than I would have expected becuase of the different methods.

Since Jan Rightmove prices have grown 6.9%, so it would be reasonable to assume that for the next few months ODPM will be showing fairly large MoM increases.

Here is the timeline for housing transactions from the BOE

houseBOEtimeline.gif

I hate to think the BoE is influenced in anyway by Rightmove data :ph34r:

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You'd be right if a large external shock changed sentiment very rapidly, as in that case asking prices would not give advance warning.

But if sentiment changes steadily, the figures should still pull roughly together. In a buyers market, the %age of asking price achieved as sale price does fall, but only by a few per cent, and the direction of price movement (up, down or level) is likely to be flagged in advance by asking prices. It's not assuming that people get their asking prices, it's assuming that the % of asking price achieved is reasonably constant, and that the fall in this % as the market turns downward is less significant than the overall correlation between the indices.

Are you saying that asking prices are the deciding factors in achieved prices whatever is happening in the market? Surely, this would result in a one-way trend.

For example, if I put my house on the market, I'm likely to base my asking price on what I and my estate agent have witnessed over the recent past by way of sale prices. Based on your (and KON's) theory, the link between asking and achieved prices would mean that, on average, I would get near what I asked, whatever has happened to the market in the meantime. In other words, it's a one-way trend. This can't be true.

p

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Errrrrr, No because Rightmove is nothing to do with actual sales and is simply asking prices.

Where I am in SE London, asking prices have risen in the last 2 or 3 months, but the market has stalled badly once again now.

There is mounting stock and very, very little seems to be moving.

I would therefore be looking to see Rightmove going negative in the next few months as people reduce their prices in an attempt to get some interest.

I'm also in South East London, and my experience differs from yours (I have seen both rising asking prices and places going under offer very quickly). I accept, however, that SE London covers quite a large area and that we might not be looking at the same end of the market.

I think we need to be careful when dismissing Rightmove; I remember people on this site eagerly seized upon it last year when it was showing month-by-month falls. Now it no longer fits with the bears' message, it is being dismissed. Let's at least be consistent.

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Are you saying that asking prices are the deciding factors in achieved prices whatever is happening in the market? Surely, this would result in a one-way trend.

For example, if I put my house on the market, I'm likely to base my asking price on what I and my estate agent have witnessed over the recent past by way of sale prices. Based on your (and KON's) theory, the link between asking and achieved prices would mean that, on average, I would get near what I asked, whatever has happened to the market in the meantime. In other words, it's a one-way trend. This can't be true.

p

You've kind of answered your own question. It's a feedback loop. If properties are selling, then EA valuations are buoyant, and people are encouraged to try for recent ceiling price, or a bit higher. If the market is slow, valuations and asking prices become more cautious. If the market is falling, EAs may even advise you to go down a bit to achieve a quick sale. So the rise or fall in asking prices is directly influenced by what is actually happening in terms of sales. They don't exist in a vacuum.

That doesn't mean people can ask anything for a property and get it. Ask too much and you don't sell. You have to ask for a price that is plausible given the state of the local market. So asking prices are the earliest indicator in that they come before sales prices. But they are part of an ongoing feedback loop where sales influence expectations, which influence asking prices, which influence sales prices and so on.

Remember these are averages. They will include people being overoptimistic in boom times for sure, just as they will include prices that are slashed in difficult periods. But moves in the average asking price are a reasonable (if not 100% reliable) indicator of where the market is going. I think Spline has a graph somewhere on the forum showing the correlations between the various indices and volume of mortgage approvals and they are all pretty close.

I do agree that the wobbliest part of the correlation might be around a turn in the market as asking prices may stay in fantasy land for a while while the market slows. But I think there will still be some correlation - because it will only be after a stand-off with low volume of sales that EAs start giving lower valuations and vendors start accepting them.

Edited by Magpie

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I do agree that the wobbliest part of the correlation might be around a turn in the market as asking prices may stay in fantasy land for a while while the market slows.

That is my very point!!

Imagine, for a minute that I'm putting my house on the market today. Also imagine that, in two months time, prices will drift back but, at this moment, neither I nor anyone else has any idea that it will happen. There is no way that I can anticipate what my sale price will be and I will, therefore, expect to achieve current prices or better. But, in fact, the asking price that I have plucked out of the air has no correlation with the price I achieve if the market turns, even if only gradually.

If the market is moving in one direction, as it normally does, then there is a correlation. If the market changes direction, asking prices won't anticiapte it. Otherwise we'd all know in advance what'll happen! If only life were so simple. There will just be a change in the %age achieved ratio for a while as the market adjusts.

p

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This time lag thing isn’t so much a theory, more of a statement that a house purchase runs along a time line and is recorded by different index compilers at different times in the process. If you want to compare the different indices side-by-side you need to correct for the (approx) relative time lags.

Also, most of the time, the price stays roughly constant during the process, so the correlation between the indices, at least on this account, should be maximum when properly shifted – this implies that the more timely indicators (i.e. those with the least lag) can be thought of as predictors of the later ones. Hence the reason to treat the lastest LR figures as telling you rather more about what happened some time ago than what is going on in the EA's offices right now.

Asking –> offer –> approval –> completed –> registered

-6 weeks .... 0 ..... +4 weeks ..... +10 weeks ..... +16weeks

Rightmove .............. Haliwide ...... ODPM ............ Land Reg

Edited by spline

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That is my very point!!

Imagine, for a minute that I'm putting my house on the market today. Also imagine that, in two months time, prices will drift back but, at this moment, neither I nor anyone else has any idea that it will happen. There is no way that I can anticipate what my sale price will be and I will, therefore, expect to achieve current prices or better. But, in fact, the asking price that I have plucked out of the air has no correlation with the price I achieve if the market turns, even if only gradually.

If the market is moving in one direction, as it normally does, then there is a correlation. If the market changes direction, asking prices won't anticiapte it. Otherwise we'd all know in advance what'll happen! If only life were so simple. There will just be a change in the %age achieved ratio for a while as the market adjusts.

p

I agree but I think it's a bit more complicated than that. Most vendors are reluctant to drop too far from their asking price. So when you get to a stage where asking prices are too optimistic, sales volumes start to fall. However this doesn't immediately lead to average sales prices falling back. You have a phase where only the best property sells, albeit at a slightly higher discount from asking price (so still a rise, if a decreasing rise) - the rest simply doesn't sell. So the rise in asking price still correlates roughly because you get this period of stand-off.

Then the pressure builds to lower asking prices or to be realistic with asking prices. And then that leads on to lower sales prices.

It's a psychological thing. Vendors are unwilling to accept 80-85% of asking price rather than the more normal 90-95% (average discount from asking price rarely goes any lower than that), so they just don't sell (except a few forced sales which start to slowly push the average down). It's only later when they have accepted that the market is no longer rising that they go for more realistic asking prices, which in turn lead to lower sales prices.

So sales prices affect asking prices, but it's only once asking prices fall that actual average sales prices fall.

Edited by Magpie

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  • 302 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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