Who’s Right About House Prices?
A great big yawning gap is opening up between house price indices based on the Land Registry’s data and those based on lenders’ mortgage approvals.
Just last week Nationwide told us that house prices had tumbled into double-digit decline with a -10.5 per cent fall since August 2007.
The next day the Land Registry revealed that prices were down a mere -2 per cent year-on-year.
Then the FT’s index, based on Land Reg data, told us that “despite commentary to the contrary” prices in July actually rose year-on-year by 0.3 per cent.
So entrenched is our belief that the market is in freefall that people are inclined to get very tetchy indeed when the Land Reg stats are cited.
Back in June, when we reported a Land Reg rise in prices, some of our readers were practically frothing at the mouth! (I blogged about this here: Price Rise My Ar**! )
I’m not saying the Land Reg is necessarily the final word on prices (although their stats do cover all sold properties), but I do think it’s interesting that the media has very little to say about the obvious discrepancy.
But then, if you’re a sub-editor, putting the frighteners on Middle England with “House Prices Plummet By Ten Per Cent!”, is probably going to shift more copies than “House Prices Down … But Only A Bit”.
Stuart Law, over on Assetz’s blog, has some typically punchy views about the lenders’ indices … and he may well be right.
But I’m more interested in what you think. Based on observation of your own local market, who’s closer to the truth? The Land Reg or The Lenders?
Related Tags: Buying & Selling, House Price Reports, house price indices, Land Registry indexRelated Posts:
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Well the LR is probably a better indicator as it is dealing with actuals rather than approvals which i think the mortgage companies use. Also the number of transactions is so low that it cannot produce an accurate reflection of the true value of a property.
The test will come when buyers decide that the market is at the bottom. I bet that prices move back very quickly because there simply is not enough supply of properties and this will stoke the upward movement very quickly. This downturn has not sorted out the imbalances in the system which have stoked house price inflation.
The Land registry is the best indicator BUT it is always out of date. If agree a price with you today, the deal will take two months to go through, and then another two months therefore the prices reported are really 4 months or so OOD. We will be coming out on the other side of the U by the time the land reg reports the bottom of the market.