Many in the surveying sector will be bracing themselves over the coming weeks for a number of challenges, certainly as we start to see a growing amount of house price ‘data’ being issued into the market.
And, as the time progresses and we move further away from that English housing market restart date in mid-May, there will be a growing belief that the data has to be more robust because it is based on greater levels of transaction and activity.
That may well be the case quite simply because we are going to see greater levels of completions and you are not going to be able to argue with the price that someone paid to purchase a property. It’ll be there in black and white.
However, in other areas, I’ve never been quite sure that we are comparing apples with apples when it comes to house prices, valuations and the amount the property is eventually sold for.
For instance, a regular amongst the house price indices comes from Rightmove – indeed its latest iteration has been published on the day that I write this.
Rightmove – given its size and the number of properties on its portal, etc – tends to generate a lot of media coverage for its index. Today, and over the coming days, it is likely to generate significantly more because it has said that prices have increased by 1.9% compared to their pre-lockdown levels.
Many in the housing market will be ecstatic at such figures, especially given the pessimistic outlook that has been projected for house prices throughout lockdown. Indeed, Nationwide’s house price index said prices had fallen between April and May by 1.8%, while Halifax suggest the fall had only been 0.2%.
But that is still a fall, while Rightmove’s numbers were rather more positive news, until of course you realise that the Index is not suggesting that average house prices have risen by 1.9% since lockdown, but that average asking prices have gone up by that amount.
Of course, as the market plays itself out over the coming months, we may well see a rise in house prices to match this but, at this point, it’s very early and difficult to say this. And, let’s be in doubt that most of the indices are talking about the purchase price of a property, not the asking price.
We’ve talked before about the overwhelming need for realistic appraisals of property when it comes to the work agents carry out; and, while I completely understand, asking prices being somewhat higher than pre-lockdown, after effectively having a three-month closed market, they do not tell me (or indeed our surveyors) about the real value of those properties.
So, while this data clearly has a place in the market, it’s not necessarily helpful in terms of setting realistic metrics for property owners, agents, lenders, advisers, and others to be benchmarking their values at.
Consumers may simply end up highly disappointed that the valuation put on their property does not chime with the ‘asking price’ that the property initially went to market at. For what it’s worth, there may not be large deviations between the two, and I know there is some anecdotal evidence from agents suggesting that there is not a great deal of current difference between asking price and agreed price.
However, there could well be a difference between asking price, agreed price and valuation, and it is up to all of us within the sector to recognise that fact and to present a realistic picture and appraisal of this outcome, if that is what comes to pass.
These are of course difficult times to be valuing property but the longer we do this, the better it will be for all stakeholders. In June we received very large numbers of instructions and were significantly higher than the same time last year, , and this is likely to grow as that pent-up demand continues to be unleashed.
That is positive news, and we are confident it will keep coming, however, it’s also important that we don’t just judge the property market or its value, by house price data which may not be the whole truth.
Simon Jackson, Managing Director at SDL Surveying