Where next for property prices?

Where is the property market going? Are house prices going up, slowing down or falling? There are several surveys each month and the information coming from them often seems to be contradictory.

Recent surveys for August said the following: Halifax has the annual house price inflation at 11.5%; Nationwide’s was 9.6%; Hometrack’s was 5.4%; Rightmove’s rate was 12.8%; and the Land Registry’s was 9.4%. Prefix these with jumping, tumbling, crashing, soaring and easing and it is easy to sensationalise the market’s movements.

Incredibly, average house prices in the UK cover a staggering range from £176,300 to £235,176, and in London the range is from £292,409 to £384,439. So, while some are many months away from a £200,000 average house, others see the £400,000 as ‘just round the corner’ (maybe in both senses!).

Differences occur for a number of reasons. One is the actual point at which a house price is measured. For example, Halifax and Nationwide look at the value of the mortgage they approve for their customers; the Land Registry looks at the actual price paid for a completed deal. Rightmove uses the asking prices of houses on its websites. The figures from Hometrack are based on answers to questions of their surveyors – not on actual prices at all.

It would be logical, therefore to expect Rightmove to see the highest prices, followed by the Land Registry, with Halifax and Nationwide behind. Hometrack’s figures will be more of a forecast than an actual measure. A further problem with the Land Registry figures is that they are published a month behind, so they tend to have an out-dated feel to them.

Most City experts trust the figures from Nationwide and Halifax, with the Land Registry’s figures as back-up.

There are also figures regarding mortgage approvals published by the Bank of England, which give an indication of where house prices will be in around six months’ time. If the number of mortgage approvals falls, then a fall in demand is expected, accompanied by a reduction in house prices.

As ever, the truth will be in between. Regional variations can skew the overall average, but most recent evidence does point to a house price inflation slowdown, but not a crash.