property
House Price Surveys Explained – It’s Not All Guesswork
Well, here at the Big Property List we seem to be reporting on house prices going up and down every other week so we thought we would take a look into the house pricing process and what it all means. How are these figures generated and do they give an accurate picture of what is happening in the UK with regards to house prices. If you are looking to move home in the near future, it pays to check out the latest properties in your area and get a good idea of what is going on.
Land Registry
The Land Registry has been recording property prices since April 2000 and records all completed property sales in England and Wales. Their data however goes back as far as January 1995.
Using a process called Repeat Sales Regression, the Land Registry measures the changes in property prices over time. This means it will only measure the change in price of properties that have been sold in the past. This gives a fair and proper comparison.
Most property sales are included in the Land Registry survey except the sale of commercial properties and ex-council properties sold at a discounted price. Any property transfers or repossessions following a divorce are also excluded to avoid misleading the statistics.
A report is published each month on the Land Registry website and a quarterly survey is also published on the BBC News website.
An average price is reached by adding up all the transactions in any given month and then dividing the total number of sales. Almost all residential sales are included and recorded providing a really unique picture of national and also local property prices. The Land Registry can actually give a fairly accurate insight into prices at postcode level.
Government Price Survey
The Government also produces its own monthly house price index. This is issued by the Department of Communities and Local Government (DCLG). The survey covers the whole of the UK and is based on the data received from the Council of Mortgage Lenders.
As a result of data being supplied by the Council of Mortgage Lenders and including the number of mortgage-based sales, cash sales are not included.
Nationwide and Halifax
Both surveys provided by the Nationwide and Halifax, cover the whole of the UK and are based on a sample of their loans each month.
Property prices measured in these surveys are those which are agreed with a mortgage is approved and not later when the sale is at completion stage.
Just like the DCLG survey, the Nationwide and Halifax surveys are based on mortgage-based property sales so no cash sales are recorded.
Royal Institution of Chartered Surveyors (RICS)
The RICS survey reports on confidence in the property market and not the latest changes in property prices. A survey is conducted of 250 estate agents in the UK (all members of RICS). They are asked whether they feel the prices in their areas of business have been rising or falling over the previous 3 months.
Whilst this might not appear to be a reliable way to measure the property market, it is actually quite useful in reflecting changes and how professionals feel the market is developing over a given time period.
As well as house prices, respondents are also asked how they feel about a number of other subjects such as the number of property buyers falling or rising.
The data provided by these house surveys is very useful and helps those in the industry determine the latest trends and property prices and those looking for a new home to strike whilst the iron is hot or hold back until situations improve.
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House Building Industry on the Rebound?
According to the Department of Communities and Local Government, the house-building industry has showed signs of recovery during the first quarter of 2011. The number of new build properties in development has risen by 26% with a total of 29,140 being started during the three months to the end of March.
However, commentators are still warning that whilst the house-building increase is good news, it was likely the number of building starts in the previous quarters were affected by seasonal inclement weather.
Also, the number of new build properties currently started is still half the level that is required to satisfy growing demand. The credit crunch hit the house-building industry very hard with developers struggling to raise or secure the finances required for each development project. This resulted in many sites being abandoned or mothballing whilst many developments never even got off the starting line.
Simon Rubinsohn, Chief Economist at RICS, said “We’ve seen data released this morning which shows a welcome rebound in housing starts in the first quarter of this year, but this increase largely reflects a recovery from the weather-induced weak reading for the final three months of last year.
“Even allowing for this improvement, the underlying picture still remains a cause for some concern. The trend rate in delivery for housing starts is currently running at little more than 100,000 per annum, against estimates of new household formation running at more than double this figure.”
Since the beginning of 2009, the number of new homes being started has been gradually rising in spite of the dip that was experienced in the second half of 2010.
A total of 105,930 homes were completed during the year up to the end of March. This figure was 7% down on the previous 12 months and approximately 60% less than before the credit crunch hit.
London saw an increase of 52% with regards to new homes being started whilst the South East saw the largest number of properties being started at 19,740. Compared to the same time in 2010, the number of new build homes has fallen in the North West, North East, Yorkshire, and the West Midlands.
Help has been promised to house builders from the Government. Housing Minister, Grant Shapps, said “Today’s figures are welcome, but they are only the start of the story.
“The construction industry building the homes this country desperately needs can also expect more help.
“We will work closely with house builders and listen to their suggestions about how we can improve, and continue to strip away the bureaucracy and red tape that for so long has piled unfair costs on this vital sector of our economy.”
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Going Going Gone!
If you are thinking of buying a property at auction it’s a great time to do so. There are a huge amount of opportunities on the market right now and more and more people are turning to auctions in order to sell a property quickly or snap up a bargain. The slow market and increasing number of houses being repossessed has resulted in a dramatic surge in auction sales and it’s good know the advantages as well as the risks involved with buying a property this way.
Where to Look
You can find out about local and national auctions through estate agents, newspapers, and our online property auctions directory. Many auctions are also advertised by the roadside so look out for signs advertising local auctions. If you are buying in a new area it is a good idea to do some research before you decide which auctions to attend. There is plenty of information online that can assist you so that you don’t make any hasty decisions.
On the Day of Auction
Before you head off to the auction house, it’s a good idea to call up to make sure any property you are interested in bidding on has not already been sold or has been withdrawn. You should also ensure you have your deposit to hand – many auction houses accept cash or cheques, but it’s best to check beforehand. You will normally need 2 forms of identification in order to register.
Once you have been issued with your bidding number you’re ready to get started. If you are interested in a particular lot it’s important to stay calm once bidding commences. You should already have a maximum price that you are prepared to pay for the property and make sure you stick to this figure. Many people get carried away by the bidding process and have bid well over the odds as a result. It’s a good idea to gauge interest in the property before you start bidding yourself.
All lots up for auction will have a reserve price which is the minimum price the sells is prepared to accept on a property. This figure is not disclosed, but if bidding doesn’t reach this figure the property owner may well decide not to sell on the day for anything less. However, the guide price (that is the price the property is expected to sell for) should give you a rough idea of what the reserve price may be and hopefully this figure is in line with what you are prepared to pay. Otherwise you may be in for some touch negotiations with the buyer or lose out on the property completely.
Tips for Bidding at Auction
Buying or selling a property at auction has a host of benefits and is becoming more and more popular across the UK. As long as you stick to the golden rules below you should find the process enjoyable and very rewarding.
- Always research the property you are interested in fully
- Make sure you have your finances in order and the required deposit (usually 10%)
- Get to the auction house early to register and take stock of the environment
- When bidding commences, don’t get carried away – remember your budget!
- Bidding can be intimidating so try to stay calm and focused
More information on property auctions in the UK can be found in the resources section on The Big Property
List website.
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Property Blog Awards recognise The Big Property List
Kudos to the people over at Primelocation, arguably the second most popular UK property portal, owned and operated by the Digital Property Group, for awarding us the runners up prize for the best property blog post in 2010.
Well, runner up anyway!
We got the recognition for an insight piece we published last year about the Tesco/ Spicerhaart Online Estate agent isold.com and their direct marketing approach targeting homeowners in their launch areas. The post received quite a lot of comments from estate agents and discussion from the online property community.
We were in good company and beaten to the post (get it?) by Sam Collett with an article on her intelligent and entertaining What Sam Saw Today blog – a diary of a property developer, professional landlord and entrepreneur.
Other runners up in the category were Ben Harris’ Housing Dabble, Graham Downie’s A little Drop of Cognac and Henry Pryor’s Housing Expert.
The overall best blog 2010 award rightly (in our opinion) went to Graham Norwood’s property newshound which just goes to show that print and online journalism can compliment one another as Graham is one of the UK’s foremost Print Property Journalist and in our eyes the most clued up technology-wise.
Accepting his award Graham said:
“I’m delighted and honoured…so much property writing, by industry professionals and journalists, concentrates on the most exclusive homes.
They are fantastic but I wanted my blog to look at other issues, too, in a way which informed and entertained, and sometimes infuriated.”
Well said.
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Garage sales and gardens
Interestingly I’ve just been asked to dispose of a chunk of garden. It sounds simple and relatively inexpensive. A couple of years ago an agent in Knightsbridge was asked to dispose of a garage, and by the way this story has buggered up almost all garage sales since.
The agent suggested a guide that sounded pretty punchy, c. £150k I recall, and expected to get offers on what was, after all, a single lock up garage with no other planning angles. What they didn’t expect was to get two super rich egos to decide they wanted to have a ‘mine’s bigger than yours’ competition. The resulting price was over four times the guide and the owner must have though all their Christmases had come at once.
I’m not sure the garden will go the same way but it is possible. Surrounded by some of the most expensive real estate anywhere in the world, nine stucco fronted porticoed jobbies to be precise, lived in mostly I suspect by people who move money around and get paid a fortune for doing so.
It’ll be fascinating to see what someone will pay to add c.1000 sq ft of outside space, that can only ever be a garden, to their pile especially given that one or two are woefully short on outside space. More soon……….
Ed Mead is a regular contributor to The Big Property List blog. An Estate Agent for over 30 years, he has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find him online are the Douglas & Gordon blog and Twitter
The danger of cheesy property jingles
Last week we we spent some time putting together self-nominations for a couple of property awards taking place this year. As a relatively new property portal we don’t expect a major scoop but we do have credibility applying for categories such as best content (we’ll you’re reading this aren’t you?).
Once we started listing our achievements and quantifying them, it made us realise how far we’d come, and was quite a motivational process for the whole team.
To further lighten the mood in the office we created a jingle to go with our nomination. What a mistake.
I try not to listen to local radio purely to avoid cheesy jingles and adverts and this one takes the biscuit. It made me laugh so hard i had to listen to it three times – and then it was stuck in my head all weekend. This wouldn’t have been such a problem but I took part in a 5o mile bike ride with nothing else to think about for 3.5 hours than the stupid Big Property List jingle going round in my head. Apparently the Germans call a tune like this an ear worm.
For your enjoyment (and torture): Listen to The Big Property List Jingle
2011 property market…early signs?
Frankly there wasn’t much appetite or excitement for predicting what might happen in 2011. It’s a mug’s game at the best of times and most of us in the business have been so worn down by the last few months of 2010 that anything would be better. So are the first signs good?
Well it depends again on who you are and what constitutes good. If you’re an estate agent the chances are it’s not looking overly good right now. More of the same grind with no sellers and a frustrated bunch of buyers who have good mortgage offers but nothing to buy.
If you’re a property owner in London chances are you’d be feeling happy with that as the lack of supply is creating the same effect as a strong demand, ie it’s keeping house prices up. Indeed for really good quality property this year is looking very good for values.
But is that what the market needs or wants? For all the people jumping up and down delighted at any woes affecting estate agents it’s worth reiterating that estate agents are the bellwethers of the wider economy. If agents are going bust (and they have been, with 40% of individual agents out of work since 2008), and companies likely to this year, then it means the entire industry that depends on property: building, decorating, soft furnishings, surveying, solicitors, movers etc etc are all in trouble. If people aren’t spending on property the chances are they aren’t spending elsewhere. That’s a universal truth whether you like it or not.
So there’s nothing much more to say as it’s early, and things may yet get busier, but if they were going to get busier I’d be seeing more sellers looking to get their properties valued now with a view to taking on the Spring market. I cannot grasp why sellers aren’t going for it with historical low rates for buyers likely to have bottomed out and price gains from the unexpected bounce last year still crystallised, and perhaps looking as if they may slip later this year. Perhaps we’re back in that dreadful spiral that potential sellers can’t find anything and so aren’t bothering to go to the market.
As usual when these situations arise it’s difficult to see who’ll blink first, and with buyers very reluctant to pay the asking prices some desperate agents are putting on property, I think it’ll be sellers who’ll blink and go to the market, the only question is can the cleverer ones avoid a possible lemming like rush later in the year.
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Would a Rose by any other name smell so sweet?
It amused me a few weeks ago to read about an estate agent in Brighton who had sent his staff on a poetry course to inspire their descriptions and liven up particulars. At the other end of the scale one estate agent has been well known for his brutal honesty ; with prose such as ‘Dear God, it’s difficult to imagine a more disgusting house than this’. Too far?
This week a description from Your Move for a 2 bed flat for sale in Dumfries caught my eye when the description included reference to a ‘box room’.
Surely they mean cosy, snug, tidily proportioned. I must admit I quite like things called as they are. You can call it a handheld earth removal tool but when I see it, I’ll know it’s a spade.
I’d definately buy a house from someone like this, and knowing that, I’d probably sell a house with someone like this.
Check The Big Property List for other houses and flats for sale in Dumfries from Your Move and other Estate agents.
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Energy Efficiency – staying warm without turning up the thermostat
Now the weather has turned cold in the UK, our thoughts have turned to how we can keep warm – indoors as well as outdoors. For many of us that simply means turning up the thermostat another notch. But with reports of fuel price hikes of 7% and higher imminent, suddenly energy efficiency has become an even hotter topic.
MGM builds highly insulated apartments and chalets in the snowy French Alps
Starting with our existing homes, the key word is insulation. The idea is to keep the heat in and the cold out. 25% goes out the roof – so lay up to 270mm of insulation; 35% escapes through the walls. Combat this by having cavity wall insulation. If you have one of the 6 million solid brick wall homes, consider dry wall lining.
Windows and draughts account for 25% of heat loss in our homes. So plug the gaps with filler, use draught excluders on your exterior doors (and don’t forget the letter box). If you can afford it, think about double (or even triple) glazing. If that’s too costly, secondary glazing is a cheaper alternative.
Next, find out how much electricity you use (or waste). Buy, or rent from your local library, an electricity monitor. These clever gadgets show you how much electricity you are using in the home. Flick the kettle on and you’ll see it costs a shocking 25p to boil water if it was to be left on continuously for one hour. So fill the kettle only with the amount of water you need and don’t boil, walk away and then have to reboil.
Look at what you leave on standby overnight – do you need to? Get a standby isolator or switch the items off at the wall (except the Sky box, which would then need reprogramming). Don’t leave old style mobiles charging overnight as these ‘vampire’ gadgets continue to suck electricity even once the battery is fully charged.
Or take a look at a more permanent electricity reduction solution. The VPhase is a new device that through independent testing has been shown to cut electricity bills (typically by 10%), reduce energy use and lower carbon emissions. Find out how much money and CO2 you could save with the interactive tool at www.vphase.co.uk
VPhase uses voltage optimisation technology to reduce and manage the voltage coming into your home, making your electrical appliances use less electricity and cost less to run. Unlike smart meters which require a change in behavior, the VPhase device works immediately, without any need for a change in lifestyle.
The unit costs around £250 installed when fitted at the same time as a fuse box, and can be quickly and easily fitted by a qualified electrician. The VPhase has a five-year warranty and with payback periods typically less than this it represents a risk free green investment.
If you’re considering buying a new house in the UK, you’ll find that they are at least 25% more energy efficient than houses build pre-2006 (and at least 50% more than a Victorian property and probably more) through legislation. Housebuilders are achieving such greater efficiency by using better insulants when building,
sealing gaps better and by preventing thermal ‘bridging’, which allows the cold to travel from the outside in via metal pins or ties.
In some cases, the net result is homes that require little or no heating – even in winter. The latest built homes don’t even have radiators installed. Generally, energy efficient under-floor heating provides what heating they do require. In other examples, mechanical heat ventilation recovery units recirculate rising hot air to keep the homes warm at ground level.
The homes at AlmaVerde, on Portugal’s Algarve, have been built to a year-round 26C interior temperature
In more temperate foreign countries, where many Britons choose to buy a holiday home, or retirement property, the same technology that provides heating in winter is reversed to provide air-conditioned cooling in summer. If the electricity required is generated from a renewable energy source, such as solar, there is no in-use CO2 impact, and electricity bills can be negligible.
The housebuilders and developers who are the members of Sustain Worldwide (www.sustainworldwide.com) are each building homes, resorts and communities around the world where energy efficient, eco-friendly and sustainably constructed properties and communities are the norm.
Sustain Worldwide Chief Executive Anwar Harland-Khan said: “The energy-efficient homes of today are stylish, beautifully finished, invariably with warm and light spaces for living. It comes as no surprise that sustainably built homes are now standing tallest of all, while the walls of conventionally built homes are starting to show cracks.”
This article was contributed by Gordon Miller, sustainability and communications director of Sustain Worldwide. +44 (0)20 7754 5557 www.sustainworldwide.com/
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Buy to Let may be the investment of choice, says Ed Mead
For the first time since I’ve been at Douglas & Gordon we made more money last month from lettings than we did from sales.
Given that we are a medium sized company that’s not as trite as it sounds. Renting seems to have finally lost it’s stigma and even seems to be where sensible people reckon they should be when property values appear to be on the way down.
Those who work in lettings have often felt, because of the lack of crash bang months, that the drip drip [albeit constant] nature of their income means they’re the poor cousins.
But with buy to let borrowing on the agenda again and with all the publicity surrounding Council tenants suddenly they’re front page news. About time I reckon. Having rented for over 20 years and been dead pleased with it, many commentators were amazed and quick to point out how I was missing out on the market. I politely replied that I had been investing in something slightly old fashioned and possibly more rewarding. It’s called your own company.
Such is the obsession with property (thank heavens as I’m an estate agent after all) that investing in something that actually yields jobs AND a return seems to have become a lost art. With 70% of the world’s wealth now tied up with property it’s hardly surprising.
Perhaps with standard investments yielding derisory returns entrepreneurs might start to see the light of day again, but with residential rents looking set to rise sharply, capital values stagnant at best, and borrowing costs as low as they’ve ever been I would think buy to let might just become the investment of choice for a few years to come.
Author Biography
Ed Mead is a regular contributor to The Big Property List blog. He has been an estate agent for over 30 years, and has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find Ed online are:
Douglas & Gordon blog
Ed Mead on Twitter
