LONDON HOUSE PRICES

There are whole host of sources that will tell you what is allegedly happening to London house prices. The one thing that they all have in common is that none of them agree... ever. The widely quoted house price indices are complied by the Nationwide, Halifax (now HBOS), the Land Registry and Rightmove. However, there are numerous other sources. I suggest that you ignore them all and I will tell you why later and what you need to do to find the information you will need.

But first let’s look at why the data differs:

"The only statistics I can trust are the ones I make up myself" - Winston Churchill.

London House Prices

The major problem with London house prices is that the data for each house price index is collated differently or uses different data sets. The clearest examples of this are the Nationwide and Halifax data. These are two of the biggest mortgage lenders in the country. Unfortunately because they use their own data and interpret it differently they never agree. What is worse is that they do not even always agree on the trend. For example in March/April 2009 Nationwide said the market was up 0.9% while Halifax said it was down 1.9%!

 

 

 

 

 

 

The Land Registry data is supposed to be the most accurate as it details every property sale in the country. Unfortunately there are issues with this London house prices data:

  • It is not always accurate (human error).
  • It is only released three months later so the market may well have moved considerably in that time.
  • High end purchases often do not feature as they are not always structured as plain residential purchases (e.g. for tax reasons, the property may be registered in a company and the company may be bought and sold rather than the property itself).
  • The data is incomplete and therefore of limited use – more about this later.

Rightmove has probably the most up to date data, but this does not register sold house prices. Their data is taken from “asking prices” rather than sold prices, so again is not particularly accurate.

ALL THIS IS IRRELEVANT ANYWAY

Fortunately you do not need to worry about London house prices data, because you are not interested in what the market in general is doing. Your sole aim is to find and acquire the best property available within your search requirements. Therefore if house prices in London are up 5% in the past two months, this does not matter. Every borough is different, so what is happening in your target area could be completely different. There will also be differences in the price increases/decreases in each price range in your area. Again this does not really matter either! If you use the method I describe in the “Finding Property” page, you will know exactly what is happening within you target criteria. More importantly you will know whether a property represents value or not (see page “Property Valuation”).

DOING YOUR RESEARCH IS VITAL

You cannot rely on newspaper reports or house price data to make a decision. By their very nature the information they provide is far too general. Unless you are planning to buy the whole market this makes it for all intents and purposes, useless.

For example, you may go to www.landregisteronline.gov.uk or www.nethouseprices.com to find sold prices of property in a  particular street. However, this information will be misleading because although you will find the price and date of purchase you will not know:

  • How big the property is (there may be an extension or sub-basement which is not obvious from the outside).
  • What condition the property was in when sold – this could have a huge impact on price especially in prime central London.
  • Whether that the buyer found a bargain or overpaid.

Without this information you cannot take a sensible view. Therefore you need to make sure that you do extensive research to find out what has sold recently in the area, to work out the fair value of your prospective acquisition.
Of course if you do not have the time or inclination to do the research or would like all this handled for you by a professional, you may want to consider having a property finder represent you. For more information please go to London property finders or click on “Property Finders” in the menu.