Indices are fine but surveyors are best

RICHARD SEXTON
RICHARD SEXTON DIRECTOR OF BUSINESS DEVELOPMENT E.SURV

There are a variety of house price indicators in the market so when consulting them it’s important to understand how they are constructed, as well as the data on which they are based.

For example, high profile lender indices are based on a subset of agreed prices or mortgage offer prices that the lenders concerned are aware of.

By definition, they can’t include data for the 98 or so other lenders also active at the time.

Other online indices are taken from surveys of asking prices and estate agents’ opinions of their local market.

The good news is that over time there is broad agreement between all these indices, although crucially some appear to capture market conditions earlier than others. But each tends to show a measure of consistency around the average, either conservative or bullish.

The LSL Acadametrics index deals with these issues by acting as an index of indices to smooth out anomalies and capture virtually all relevant Land Registry data.

Unlike other indices it is reporting 1% price drops in each of the past four months so it will be interesting to see if the other measures crystallise around this trend soon.

Of course, while indices are useful reference points, for professionals involved in the mortgage process it’s the specific value of a specific property at a specific point in time that is important.

And for that, you can’t beat asking the advice of a good old chartered surveyor.