Friday, June 27, 2008

How come? Perhaps a lag in data!

House prices 'unchanged in May'

House prices in England and Wales were unchanged in May and up 1.8% over the year, the Land Registry says.

Posted by nooneo @ 11:32 AM (3114 views)
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35 thoughts on “How come? Perhaps a lag in data!

  • How come????!!!!!! Could it be cos there fibbin…

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  • The average price last month was £183,626. This month it’s £183,266. That’s a -0.2% drop according to my maths, not 0%.

    The overall aggregate value is a little dissapointing, but then drilling down, you see places like Bath/South West (a great place to buy according to that crappy Channel 5 programme
    with Melissa and Baldy) dropping 2% in 1 month. Ouch.

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  • Hurry_up_and_crash says:

    But these are actual sales prices based upon sales which wer agreed about 2-3 months ago. Since then there has been a major downturn – so expect the land registry figures in three months time to be a lot lower than todays figures

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  • Bath/South West is a great place to buy if you like earning £12000 a year and enjoy watching people urinate in the streets and take heroin.

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  • How old are the Land Registry figures? Thought prices were down YoY.

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  • mark wadsworth says:

    It’s because the HMLR figures lag the Nationwide figures by about two months.

    To confirm that, Nationwide’s March figures show a y-o-y 1.1% increase.

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  • The BBC has never been particularly at odds about lying to the public – particularly when it comes to property and the economy.

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  • letthemfall says:

    Calling the land reg figures rosier is BBC waffle. I think quite a few BBC employees have got into BTL actually. I used to rent from one years ago. Land reg figures always lag and anyway will fluctuate a little. There is no reasonable doubt that prices are falling pretty quickly now – 10% down according to a local Surrey EA where I live.

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  • Michaeljohnson1 says:

    I’ve got to tell you that even though I’m hoping to buy soon, the prices have stabilised. There have been drops for certain and even te asking prices have come down but people are not starting to think that they’re more affordable. I would expect prices to be no more than -5% this time next year and maybe even the same. I know this doesn’t fit in with people on this site with a vested interest but the fact that prices have dropped doesn’t mean they will again.

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  • It’s not really surprising, the sellers are a pretty determined bunch – after 10 years of rises – and a lot of buyers probably think that the drops aren’t going to be long lasting.

    Little do they know that the economy is in very serious trouble.

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  • i think these figures are fluffed just like the inflation figures…. after all no-one is buying houses, so maybe out of the 2 that have been sold they were inflated prices….lol

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  • I suspect the discrepancy between this data and the mortgage lenders’ is down to the fact that the market has been a little less depressed for those who don’t need a mortgage, who tend to live in more valuable houses.

    No doubt someone will try to argue that this shows the downturn ‘bottoming out’ but I doubt many FTB’s will be that easily fooled.

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  • waitingfor hpc says:

    i guess they are not looking at the auctions!

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  • I believe there are BBC employees heavily into buy to let as well, who have their influence over content.

    It is completely corrupt of course – I rely on the newssniffer and revisionista sites to try to root out their biases but the BBC have lately gotten wise to this – the Hve Your Say entries they want to censor are no longer “Rejected” but are left “Awaiting Moderation” to prevent them appearing in the list of rejected comments.

    The BBC is a corrupt state media channel, and nothing more.

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  • Nobody is lying about anything – the figures are accurate.

    As Mark Wadsworth says, HMLR’s figures are delayed by a couple of months.

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  • The lie is the interpretation of the figures, drewster, not the figures themselves.

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  • Lord Pickled Onion says:

    Good point (no 5) hpwatcher, sellers are in denial…………..but the real market continues to fall away. Denial is the word of the moment. With respect to Paul (no 9), I think your points are terribly dramatic.

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  • Beartil2010 says:

    I think perhaps that’s just incompetence – the financial editor over there writes his articles in between getting the tea for everyone and putting the bins out

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  • If you really wish to know how much your house is worth,put it in an auction with no reserve and then see how much you get.Probably -30% in todays market.

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  • Let’s not automatically dismiss everbody that disagrees with us. I am happy to sit back and watch the housing market whatever the BBC says. From a cynical perspective, the more wannabe ‘investors’ that are lured into buying now the better.

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  • Forgive me if I have misunderstood all this timelag stuff but if these prices are relating to sales completed up to March only why is it being publicised as ‘prices stable in May’. For the average punter thinking of going in and buying this kind of misleading headline could have serious consequences as it is presented as a bang up to date survey..VIs will have a field day with it.

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  • I’ve got to tell you that even though I’m hoping to buy soon, the prices have stabilised. There have been drops for certain and even te asking prices have come down but people are not starting to think that they’re more affordable. I would expect prices to be no more than -5% this time next year and maybe even the same.

    Well, why don’t you just go on and buy then, if you think the time is right?

    I am going to wait, as I believe that the banks and building societies are severely damaged and the housing market has yet to catch up with the fall out. More seriously, I’m hearing about more and more redundancies everywhere…..

    I know this doesn’t fit in with people on this site with a vested interest but the fact that prices have dropped doesn’t mean they will again.

    Everybody has a vested interest, it’s just that the folk on here are honest about it….unlike estate agents and some econimists who try to cloak their statements in neutrality & objectivity.

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  • @9 Michaeljohnson1 said…

    To be honest with you, if you buy now or in the next 2 years, you will be actually throwing at least 30% of your money away. If you can actually take this sort of loss then you must be in a different financial situation than most of us and the crash will have little or no effect upon you…

    If, on the other hand your bravado about house prices “dipping a little” is wrong (it is, trust me) then all you are doing is buying into a falling market where your assets value will shrink and you will not be able to sell it for several years.

    I’m with Japanese Uncle (the great sage) who has insight from afar about stagnation and a property market that has been in trouble since the early nineties.

    I know a lot of people that would love to see you lose your shirt, but, buyer beware, we are only just at the very beginning of this CRASH.

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  • Michaeljohnson1 said…

    I’ve got to tell you that even though I’m hoping to buy soon, the prices have stabilised. There have been drops for certain and even te asking prices have come down but people are not starting to think that they’re more affordable. I would expect prices to be no more than -5% this time next year and maybe even the same. I know this doesn’t fit in with people on this site with a vested interest but the fact that prices have dropped doesn’t mean they will again.”

    Don’t do it lad!

    Don’t jump!

    It’s not worth it I tells ya!

    AHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH CRASH

    Even if the market doesn’t do down much further, by this time next year there will be more sellers willing to negotiate with quality buyers who don’t require massive mortgages because they have been saving like crazy when everyone else has borrowed to the hilt for the last 10 years.
    Cash is king.

    But seriously, if you have to buy now for other reasons, best of luck with it. I hope you get what you want.
    Remember to haggle, sellers are spooked now.
    Every seller sells for different reasons, remember that. Find one that is desperate.
    Not nice I know, but that’s capatilism for ya.
    Stinks doesn’t it!!!

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  • A note of warning to Michaeljohnson1.

    I am a London solicitor dealing with estate administration and I see the housing market from the sharp end. Houses of the recently deceased that have the advantage of being chain free are mostly not selling and the ones that have sold have done so after massive price reductions. The housing market is in melt down and this will only get worse as the recession develops and distressed sellers flood the market with unwanted property.

    If you doubt what I say you should go to an auction and see what the market is really like. Alternatively, you would do wel to study the situation that developed in Japan where a decade of house price deflation took hold and that was in a country with twice our population and very limited building land. Contrary to the media hype there is no shortgage of building land or housing in the UK and you can expect the situation to get materially worse very soon.

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  • Thanks nubbers for the link to the research methodology. After looking through the equations, I am a bit worried. Any attempt to average house prices should deal with the mix of houses being sold. If one month only townhouses in Mayfair are moving, then the average suddenly jumps to 2 million pounds. The different indices correct for this in different ways. Rightmove, I believe, just takes a raw average, so if the bottom drops out of the market (as it has), their index goes up. Halifax and Nationwide take great care to avoid mix effects. The Land registry does a statistical fit, rather than a simple average. They only include properties that have been sold twice or more, so that they can see the percentage increase. For any property sold in say, March 2003 and March 2008, one might stupidly expect the same percentage increase. But actually the increase will be different for different properties. The difference between the actual increase for a particular property and the index increase is called “error”. The index they obtain minimises “error”.

    So why am I worried? Types of property that change hands often will contribute more than properties that are rarely sold. Fine, but if the mix of properties being sold suddenly changes (as it does just after the bubble bursts!!!) then the statistical process will be strongly affected (and we only need a few percent to throw things off).

    Also, the collapse in the new build market will not be seen, as these have not been traded twice.

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  • ontheotherhand says:

    Land Registry numbers exclude repossessed properties (according to BBC http://news.bbc.co.uk/1/hi/business/3132863.stm)
    I wonder if this makes a significant difference.
    It is also a repeat sale index, so if there is any types of property that tend to change hands more often, the index will be skewed to them.
    I don’t think that sales from development companies are in the figures either. So any buy to let flat that is being offloaded now will not be in the figures because it has not been sold privately before.

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  • There are two things happening here at the same time: 1) house prices are tumbling across the board (as anyone can check with property bee). 2) Fewer houses are sold because of the credit crunch. This, however, affects mainly cheaper houses, because very expensive houses are often bought by people who don’t need a mortgage and thus do not suffer from the credit crunch. So, despite a house price crash, _average_ prices may go up. Example: Last year, three houses were sold, one for £600,000 and two for £200,000 each. The average house price was £333,333. Since then, prices have come down 10% across the board, but this year, only two houses are sold, the one that was £600,000 and is now £540,000, and one of the two that was £200,000 and is now £180,000. Today, the average price for sold houses therefore is £360,000, an increase of 8%. This is what happens when cheaper houses fail to sell and average prices are reported.

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  • @26 ontheotherhand said…

    Extremely good point there!

    Jeez, if you take the repo’s out of the equation then all the land registry figures over the coming months (years?) are going to be skewed higher than the should be. If the level of repossessions is as we expect then the whole she-bang will not even get a look in with these figures.

    “However, repossessions and property transfers following a divorce are excluded to avoid skewing the sample.” (from the article ontheotherhand said… posted)

    Isn’t that like taking out the house price inflation from the inflation figures so as not the skew them also!

    Lies, damn lies, and of course, statistics!

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  • Mikelivingstone says:

    There are some fairly simple explanation for the Land Registry Data:

    1) Clearly it is lagging data, and with deals taking longer to go through than ever before as chains are completed, some of the deals listed may have even been agreed late last year. Certainly I know a few people who have spent over 6 months in a chain.

    2) The Land Registry only reflects completed transactions. These will over represent the sellers of good quality house and over optimistic buyers. The reality is that only 1 in 15 homes are now selling. There is a huge wall of unsold property and so the market is not clearing. These frustrated sellers are now dropping their prices and eventually they will close a deal. Once these deals get into the Land Regsistry data, it will dive as we are already seeing with the Halifax and Nationwide.

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  • I’m not sure the Land Registry figureas are without problems. I know of three house that have sold in the past year where there is something ‘iffy’. Two sales dont appear on the registry at all and one sale price was deliberately grossly inflated by parents wanting to buy their son’s house at a high price (avoiding inheritance tax and presumably then claiming the subsequent loss against capital gains tax.

    The prices for the ‘real’ market, ie those houses bought on mortgage and recorded by Halifax and Nationwide may well be more reliable than the LR figures skewed by people being ‘creative’ with their transactions.

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  • happyrenter says:

    Land reg stats are pretty selective,despite being ‘actual’ sold prices at the end of the sales process.

    For the House Price Index they use a ‘Repeat Sales Regression’ which means they only look at houses that have sold more than once – in theory to do an apples for apples comparison, but of course over the time period from 2000 to present many of these properties will have been ‘improved’, (ie magnolia, wood effect floor etc high value property development) and so the results are potentially skewed – that and only being the repeat sales properties…..

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  • mark wadsworth says:

    OTOH, that’s a good link.

    But to be fair, if these forced sales are excluded on the way up, they also have to be excluded on the way down!

    Reading on … In fact, the Registry can provide an accurate picture of prices down to postcode level.

    Wot? There are postcode areas, districts, sectors and units. What level do they mean?

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  • I have always been surprised by the difference between the Halifax / Nationwide figures and the Land Registry ones which actually seem to be a lot lower (in absolute value).
    Thinking about it I’m not surprised there are big differences. I presume the Halifax figures are for the valuations on the houses they give mortgages on. At the moment it
    is very difficult for FTBers who haven’t got much deposit to get a mortgage. I contrast someone moving up is more likely to be given a mortgage and appear in their figures.
    Anyone downsizing is unlikely to appear in it at all.

    A good indicator of whether prices are rising or falling is how long properties stay on the market. If prices are falling it is likely to be ages (as I found out in 1995)

    :- Duncan

    Bought 1989 £65500, 1995 best offer £48000, sold 1999 £70500. Interesting this house always seemed to be worth about the national average.

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