Potential home buyers and sellers should always take media reports of property market booms and crashes with a pinch of salt.
Yes, this information may come from surveys or national statistics, but how reflective is it of your area?
The media talks of the property market as if it were just one market. If this was the case, then when the price market increased or decreased by, let's say, 10%, surely all of the 1.3 million properties on the property market would be subject to the same change of value?
This is obviously not the case as property values vary widely across the country. The price of the property you are looking to buy or sell will be far more influenced by local factors than it is to be influenced by national trends.
Even once a property is on the market it is possible for the asking price to fluctuate. If your property goes on to a market with few properties with a similar spec, you might find yourself if a strong position. If however, there is a glut of similar properties on the market, your home will have to be priced competitively.
The price of the property may even have to drop if it was unique when it first came on to the market, but then was followed by a range of similar properties. The same property could sell at a variation of thousands of pounds, depending when it is on the market.
There are a number of regularly issued surveys that can be useful tools to keep abreast of trends in house prices. These should not however be used to produce a realistic average house price. Within these surveys are included multi-million pound properties, as well as one bedroom flats, so are in no way indicative of the price in your area for a 3 bed semi.
Another flaw with using surveys as a house price guide is that measurements are taken by different surveys at different points in the sale. Some surveys measure the asking price, while others measure the price of sale. Also, some surveys only look at England, while others look at the whole of the UK.
Here is a quick overview of the surveys out there, as well as what each survey offers:
Right Move releases monthly figures for a broad spectrum of surveys. They analyse data from around half a million property sales. Be aware though that Right Move only analyses the asking price for the property, and not the actual sale price. This can lead Right Move to overestimate house prices. To learn more, visit www.rightmove.co.uk.
Hometrack uses data collected from thousands of estate agents across England and Wales to produce its data.
What is particularly helpful with Hometrack is that they compare asking prices with the actual price the property was sold. They also analyse a whole host of useful information, such as the demand and supply of properties in a region, the number of viewings per property and length of time property is spending on the market.
This kind of local analysis is invaluable to both sellers and buyers alike. A buyer can assess how fast-paced the local market is, while a seller can decide if their property is receiving enough interest and is in touch with the local market.
The downside is that they only release this information once a month to the public, unless you are prepared to pay for it. You can however pay between £5 and £20 to receive information on your local market and to assess your own home. To learn more, visit www.hometrack.co.uk
Both the Halifax and Nationwide compile data from the information gathered on mortgage borrowing from their branches.
Information on national trends is released on a monthly basis, but information on a regional basis is only produced every quarter. The information provided also does not take in to account 25% of property sales that are achieved without resorting to a mortgage, so a large chunk of the property market is not represented in these figures. However, they do provide a useful tool for analysing how much your property could now be worth compared to when you bought it.
The NAEA and the RICS measure data provided by hundreds of Chartered Surveyors. These figures also take into account the condition as well as the price of the property. The NAEA are also handy for assessing the demand and supply of properties by area. This information is released on a monthly basis.
The information provided by the land registry is only released on a quarterly basis and it is surely one of the most accurate analyses available. It measures the actual selling price of a property. However, as this data is only produced quarterly, the data it provides becomes rapidly outdated.
Local vs. National Property Markets
It might be all well and good to talk about the National Property Market, but when it comes to buying or selling a home in your area, you cannot beat local knowledge.
Local property markets are often divided into sectors where certain streets are valued highly because of their proximity to a school or a park (thus appealing to families), or because they have lots of parking or are close to shops.
Factors that may detract from a street's popularity include a noisy pub or a fast food outlet or high volumes of traffic.
Likewise, such things will affect house prices too. Any properties on a main/busy road are likely to be cheaper than ones set away from a road in a quiet
Performance of schools is a huge factor in the local market, and this is shown by the fact that property prices can be between 19 and 34% higher than other areas due to a good school catchment area.
On thing worth noting is that some catchment areas can change from year to year due to local demand; so if you are hoping to buy a property in a postcode to "guarantee" a place for your children at a school, its best to check with the school directly.
Is the area you are buying or selling in expanding or contracting? Are companies keen to move into or away from the locality? Are local businesses struggling or thriving?
A good sign of economic development is the number of new properties being built locally. Are run down buildings being renovated and rejuvenated?
These are not sure fire guarantees that an area will turn around or boost the property market but they are good signs that your local area may be on the up.
New transport options being developed in your area may improve your commuting time while a lack of investment in transport and increased congestion can reduce prices as people move closer to other modes of transport, or even leave the area to live and work elsewhere.
Every area has a mix of properties such as new, old, semi and detached, flats and terraced. But some have more types of property than others.
City centres have in recent years, seen developers building many more flats and apartments which have been snapped up by second time buyers and investors. As these buyers now look begin to look abroad, these types of property are more widely available.
Anything that is old, has character and is situated in a charming country location near enough to a major town or city will be in short supply as many people want to live in the area but supply cannot be increased. Hence, this is why developers are trying to build homes with the character of old ones but with modern benefits.
Key in all of this is to check with the local estate agent in the area you are buying or selling in and finds out what demand there is for different types of property.
If demand is high, you might have to offer more, or make a quick decision on the property you want to buy. Conversely, if demand is low and slow, you may have to take time and be patient in selling your home.
It is worth considering many other local factors such as whether or not an area has a reputation fro crime or whether the local school has unruly pupils etc. Such things may be a huge effect on property prices in the locality.
With this in mind, if you aren't local, it is best to read the local newspapers to see what is said about a certain area over time. If you are local, then you probably already have a good idea about certain areas and you can decide on how big an issue you feel it might be. It is worth thinking about whether such things could have an adverse effect on your insurance.
Crime does have the biggest impact on an area and you could talk to the local police or check local crime statistics when doing your research, if that would help. Insurance companies are worth talking to as well, as they will increase/decrease premiums according to the local crime rate.
The better you understand the local dynamics, the better you will be able to understand what might help you sell your home or if it is worth buying a property in an area.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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