I’m a great believer in choosing your words wisely, especially in the housing market when they can fundamentally alter a sector’s course and can ultimately make all kinds of stakeholders take action which is potentially not in their best interests.
In that regard, I couldn’t help but wince slightly at the latest Halifax House Price Index which referred to a 1.6% monthly increase in July in its average house price – up to £241,604 – as a ‘mini-boom’.
This, despite the fact that – as I think we all know – an ‘average UK house price’ doesn’t really exist given we have such a localised marketplace, and the aforementioned ‘mini-boom’ actually revealed a quarterly drop in prices of 0.2%, and a hardly ‘boom-tastic’ 3.8% annual increase on July 2019.
Perhaps the use of that phrase was done to garner headlines and coverage, and if that was the case then perhaps it’s a case of ‘job done’, but I would still caution about presenting a picture of a ‘booming’ marketplace especially given this “greatest month-on-month increase” came just a couple of months after the housing market emerged from lockdown.
Given the nature of the lack of market activity which took place from March into May, we were always likely to see pent-up demand being brought to bear, and coupled with still relatively small numbers of property supply coming to market, this – for the Halifax’s figures at least – has resulted in a price increase.
Does one swallow make a summer? Does one month’s increase make a ‘boom’ – mini or otherwise? I sincerely doubt it and, at a time when we might all be trying to keep a realistic lid on the expectations of consumers when active within the housing market, this tends to be an attempt to do the opposite.
As one agent recently tweeted, ‘You can sell today but not at a premium. You can buy but you can’t steal things.’
To be honest, I’m not even sure you need the ‘today’ in there, because that’s pretty much been the situation for the best part of a decade; certainly since the Credit Crunch put an end to the noughties decade of unsustainable house price inflation.
Talk of any kind of boom inevitably brings out those who may not understand times have changed, and who feel they can both sell for a premium and/or make a killing when purchasing. Even agents, who often get a bad press for being perceived as inflating values in order to secure business, will know that ultimately an over-priced property is exactly what it says on the tin, and therefore it’s a fool’s paradise to go in at too high a level.
From our perspective, and this is a point I’ve made many times before, the asking price is not the value of the property and neither is the offer made, even if it meets the expectations of those who put it on the market. Certainly lenders want to know the true valuation from their valuers, even if it differs from all those who have been involved in its sale up until that point. That’s what we have to deliver.
This focus on language might seem somewhat trivial but media headlines and house price indices can have a big impact on market decision-making, particularly when it comes to consumers who either want to buy, sell or do both. How many times as property professionals have we had to deliver ‘bad news’ to a client which is actually a realistic assessment of the property, rather than one designed to secure business or appease a client who had assumed a ‘mini boom’ meant their property was worth a vastly inflated amount?
In these times especially, uncertainty is everywhere. We therefore all have a duty to provide the truth, even if it might not match the expectations of our clients or the media they might have read that week.
Simon Jackson, Managing Director at SDL Surveying