Yesterday the Telegraph had a headline House Prices hit 'five year high' and you think wow. However, anyone who knows the industry and reads into the report finds out it is a load of sensationalist rubbish.
Apparently house prices jumped 2.8% month-on-month to an average of £235,741 and even bigger 5% jumps recorded in the North West of England and Wales. Prices are 1.1pc higher than a year ago and are just £2,115 shy of a February record set in 2008 according to the report.
The trouble is not the figures, but what they measure. The report the Telegraph is covering is the Rightmove index. It does not cover house prices in the traditional sense of the word; it covers asking prices of new properties being listed on the portal, with no factoring for those who price way too high either because the agent gives false expectations to win an instruction or just seller delusions being burst.
Most homes added to Rightmove have their price reduced soon after, but there is no mention of that. Indeed, the Rightmove index is as much, if not more, a measure of how "off" seller expectations are, as it is of the direction of sale prices in the UK housing market.
We can understand why Rightmove wants to talk up the market, but surely the likes of the Telegraph property writers should know better? Then again, isn't Rightmove heavily owned by a British media group?
Miles Shipside, director of Rightmove, said: "There has been a sprightly start to 2013, and while market activity remains patchy across locations and property types, some agents are reporting their busiest new year since the onset of the credit crunch."
Seller delusions aside, the Rightmove index isn't the only sign of an improving market fuelled by government lending schemes etc. The Council of Mortgage Lenders (CML) recently reported that lending to first-time buyers reached a five-year high in 2012. However, Rightmove said it had found that seven out of 10 people who plan to sell in 2013 will be aged over 45, suggesting that older people are likely to be driving the market this year.
Half of those planning to buy a home in 2013 said they would be third-time buyers, and downsizing was the main reason for selling in the vast majority of regions.
The two most active age brackets were found to be 45 to 54 year-olds and 55 to 64 year-olds, the study found, suggesting that those who already have access to equity and finance will be the main "movers and shakers" in 2013.
Mr Shipside said: "Pages viewed on the Rightmove website hit a record high in January, up by over 20pc year-on-year.
"While the journey between expressing interest and closing the deal has many more twists and turns than before the credit crunch, it is a sign of increased confidence and helps build a momentum that has been sadly lacking in many local markets over the last five years."
How Useful are Average House Price Stats? Read more...
- Tuesday 19 February 2013