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Conflicting data on house pricesPublished: March 16, 2009
Rightmove have today released data which conflicts with other major house price indices, and reports an increase in the last month. The survey, which records the asking price of properties put on the market indicates a rise of 0.9% for the four weeks leading up to 7 March. This conflicts strongly with details released earlier by the Halifax showing a 2.3% fall, and by the Nationwide who themselves showed a fall of 1.8% in February.
One of the main reasons for the difference is thought to be due to the fact that the Rightmove index records the asking price of a vast number of properties, whilst the Nationwide and Halifax record the sale price of property they have granted mortgages one, which is by its nature a much smaller sample. A further explanation for the difference could also be because the Rightmove index records the comparative value of property coming onto the market now, whereas the Nationwide and Halifax are recording the final sale values of property which may have been on the market for some considerable time, which may have been the subject of price cutting by the sellers.
The reality of the situation is that whilst sellers might be accused of being unrealistic or even stubborn, it is for them alone to decide at what price they are prepared to sell their home. For many, the urge to advance up the property ladder does not diminish just because there is a recession, and there are a large number of sellers who would happily move if they could sell at the right price. The not-unattractive alternative is to stay in their current home, in some cases enjoying interest rates which are the lowest they have ever been. The evidence suggests that sellers are refusing to accept offers of some 25% below perceived value, irrespective of the published indices.
Recent confirmation by the Council of Mortgage lenders confirming further falls in the level of mortgage transactions for house purchase supports the view that the significant falls reported by some surveys are unavoidably flawed. It is certainly the case that surveys based on actual sale prices are likely to include a significantly higher proportion of properties being sold because they have to be, and therefore the index is more likely to reflect forced sale values rather than general market values.