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Adam Smith Institute
Communities and Local Government
Average House Price Statistics
House Price Surveys
With 2013 now underway I was hoping some sense might have found its way into the UK housing market after a sustained break, or at best, there might be some delay before any nonsense crept in. Sadly it has not been the case.
Despite few noticing that optimism doesn't actually sell houses – it is still being touted as the housing market saviour for the year ahead by many. At the end of last year I caught RICS and RightMove at it, now the Halifax are gung-ho on the optimism bandwagon with their Housing Market Confidence Tracker.
Don't get me wrong – it's not a bad thing to be optimistic about something at all, the evil lies in what you do with any optimism you might find/hear/make-up.
The Halifax themselves were very specifically vague with their own predictions of +2% to -2% change for 2013 which really tells everyone they don't know and are erring on the side of caution. This apparently not being enough, it would appear they have been questioning anyone they could find to see what they thought would happen to house prices this year and conveniently converting the data into "news" for the press.
Just an initial scan of the press release reveals that the survey itself somewhat contradicts their own data suggesting that the majority of those surveyed believe there will be a change of between +5% to -5% in house prices.
Covering the same survey, Mortgage Introducer pointed out the following gem;
"Interestingly 16-24 year olds are the most optimistic regarding house prices with an overall net balance of +39. Those in the 55-64 year age bracket are the least positive (+9) followed by those aged 45-54 (+15)."
Whilst it's great the young folk out there are optimistic, one wonders why 16 and 17 year olds are being surveyed when the Halifax states on their site that you need to be 18 to apply for a mortgage through them?
In an additional fail by the Halifax and their much-hailed house price statistic-gathering ability, the BBC reports that contrary to claims by the Halifax that house prices in Southend rose by almost 15%, the land registry paints a very different picture – a rise of just 2.4%. Of course, the Halifax statistics are based on their own lending, the Land Registry on actual sales – nevertheless, a substantial difference which, once again, highlights the importance of understanding average house price statistics.
In other nonsense housing news, this time at the political coalface, MP Eric Pickles (Secretary of State for Communities and Local Government (CLG)) is in hot water. Apparently, despite having made a list of 50 ways that councils can reduce spending, Pickles has managed to rack up an additional £10,000 in spending on "confection" (read: chocolate biscuits). Whilst there has been no comment from the CLG directly – one possible excuse is that it could be an administrative error and the costs should be attributed to "Royal Spending" and listed as "Confetti" instead. Either way, whether it was on chocolate HobNobs or finely chopped up paper for hurling at the monarchy – the housing market is still no better off.
Still in the political world, another idea akin to those of my old friend Grant Shapps comes this time from Tory MP John Penrose – he's suggesting that we start listing views in the same way buildings are.
Before the world starts ranting on about how we should keep everything looking nice and so on – this is not my objection. My point is that there is more than enough paperwork to do with any kind of building already, and (as Penrose himself points out) there are already local planning laws that deal with this on a case-by-case basis. Do the building and housing industries need MORE paperwork to contend with? I doubt it.
On a lighter note in what would appear to be a guest post in the New Statesman by Preston Byrne from The Adam Smith Institute. Byrne points out what I suspect many think (myself included) is the real solution to the UK's housing market woes – the government needs to stop fiddling with it and leave it alone.
The only problem I see with this ideal is that regulation is still needed in areas such as lending (another sector that the government and its various departments seem to be woefully inept at). When you consider that banks produce or create products based on what their research shows is in demand, a serious problem is afoot when the research itself is fundamentally wrong. This might not seem like a big deal to many, but if you apply a 10%+ error to something like a nuclear power plant – you end up with a Chernobyl.
These bowler hat wearing number crunchers need regulating now – before the housing and financial nuclear winter gets any colder.
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