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All Roads Lead to Confusion!!

24 October 2011

All Roads Lead to Confusion!!

As we move towards the end of the month it’s time to get ready for the plethora of press releases in relation to what has happened to house prices in the UK during October. There are a number of sources for this including Halifax, Nationwide and RIC’s.

As a consumer it must be confusing to see that prices have increased by 1.2% one day, reduced by 2% the next day and remained static two days later. It seems that house prices move just as quickly as the stock market during a Euro Zone crisis meeting.

Is this really the case? The simple answer is no.

What is not always clear from the headlines is how they have all arrived at their figures. They all use data that is available normally only to them so will not be the same as the others. This just leads to confusion. It also means you are comparing apples with oranges or in this case flats with houses.

So what do they actually tell us and what do they really achieve? Well we do not feel that they tell us very much because in some instances the data samples are too small. The main point that they achieve is monthly PR and column inches for the firms that release them.

The Government has voiced its concerns on the matter and wants to look at how a unified index could be worked. It needs though to create a proper structure that is based on more than just headlines. They do not take into account:

-          Property types

-          Property conditions and any home improvements

-          Different types of properties on different roads

-          Different prices in different towns within the same region

All of the house price indices at best show only regional prices. However, some of the regions they use are very large. Are house prices in York the same average price as in Hull or is Oldham the same as in Alderley Edge? Also an average for a region can be misleading. For example Warwickshire may increase by 1% but that could include Leamington Spa increasing by 2% and Coventry reducing by 1%. From the outside as a consumer this is not clear and can be misleading.

So what should you do? Get hard facts and the best place to get them from is your local estate agent. They will know what is happening in your area as they work in it every day. They will understand the nuances between not only towns but also streets and areas within a town. They will be able to give you the facts and not just a high level average.

Ultimately location, location, location is still important but just as important is the correct information. Make sure your road is clear and not full of confusion.

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