From the man in the pub/Twitter to leading lenders and think tanks, homebuyers and sellers can barely move for the so-called experts giving property market advice.
Rising interest rates and rising mortgage costs have fueled fears of a house price slump, with Capital Economics predicting a 5 percent fall over the next two years. Credit Suisse predicts that prices could fall as much as 15 percent if interest rates hit 6 percent — making it more of a decline than a slowdown.
Buyers don’t want to make a big purchase at the top of the market, and sellers may be reluctant to list unless they’re going to get what they think is the best price. But while declines are obvious in hindsight, it’s not always so clear when they’re actually happening. So how do you know if you’re in one?
It is quite easy for investors to spot a stock market decline. They can tell if they are in a bear or bear market if an index or stocks in a particular sector fall by 20 percent or more over a sustained period. But there is no equivalent of a bear market for property. Instead, home buyers and sellers are left relying on the opinions of relatives and friends and a mix of official data.
Data mining
Part of the problem is that much of the housing market data is historical. You can get average figures on prices and growth from the Halifax, Nationwide and Land Registry indices, but each has flaws – lenders’ data is based on their own activity, while Land Registry has a lag of around two months depending on time when carriers record transactions. .
HMRC publishes property transaction figures based on stamp duty reports, but again these reflect sales agreed two to three months earlier. Rightmove has a House Price Index with average asking prices which gives an indication of seller confidence but doesn’t tell you what houses they are actually going for.
Another source is UK Finance or Bank of England mortgage approval data, which may indicate lending appetite, but there is no guarantee when finance will be accessed or information about the buyer’s location or circumstances. . It also reports national repossession data, but this may differ from what is happening in the region.
The Royal Institution of Chartered Surveyors has a regular Residential Market Survey based on the activity of estate agents and property professionals in the previous month. Its sample size is usually around a few hundred, but it is seen as a reliable indicator of what is happening in the coal.
“The nature of house buying adds a huge lag to the figures, regardless of which group you use,” says Sarah Coles, personal finance analyst for Hargreaves Lansdown. “There tends to be about 12 weeks between a sale being agreed and the sale going through, so by the time a completion is recorded it’s already reflecting the sentiment three months ago.”
Whichever report you look at, they all show a slowdown in price growth – but another problem is that nobody lives in the ‘average’ property. The UK is not just one property market, but different areas with different levels of supply and demand. People also buy and sell for a variety of reasons that an index cannot capture.
But while a downturn can mean different things to different people (and in different places), there are ways you can determine the health of your local property market.
Talk to a real estate agent
A real estate agent’s job is to sell property for their seller. They may not be the most objective source, but London estate agent Jeremy Leaf says firms will be found out if they are not honest, especially when it comes to survey valuation.
“It’s about finding the right level,” he says. “We had vendors asking for Mickey Mouse prices for a long time, which was not helpful. I don’t expect a crash due to demand levels and people will always have to move due to death, debt and divorce.
“I can see a lot more realism between buyers and sellers now. Many people will hold off if they can’t afford to move due to rising finance costs, but there are those who take advantage of mortgage offers at competitive rates and before they go up.’
Paula Higgins, founder of the campaign group HomeOwners Alliance, adds that while an agent works for the seller of the property, it pays to keep them in if you are the buyer. “Become best friends with your local estate agent, if a house flips quickly, they’ll want to get a buyer to complete a chain,” she says. “Get as much information as you can from a real estate agent, as well as do your research.”
Follow local listings
Users can sign up for alerts with Rightmove, Zoopla and OnTheMarket to receive new listings in a postcode area or to be notified when a listed price changes. Homes downsizing or returning to the market at lower prices may indicate a local slowdown.
You can also check the Land Registry for sold prices so you can track a home from listing to sale and see which properties are actually changing hands. Higgins says this can provide a context to counter or support what an agent may be telling you and help you decide whether you’re comfortable buying or selling and at what price.
There is a Chrome extension called Property Log that will show you the history of Rightmove listing prices. Too many price cuts can mean a property has been overvalued or hasn’t received adequate offers, and there could be a wider trend if the same thing happens repeatedly locally.
Property website TheAdvisory also has a PropCast tool where users can enter their zip code to see if they are in a buyer’s or seller’s market based on the number of properties ‘sold subject to contract’ and ‘under offer’ as a percentage of total stock. for sale.
Taken together, all these tools can help you take the temperature of your local market and spot a crash—months before the official numbers hit.
