Property Price Indices
I've just been reading an article which picks up how different media are reporting that property prices are rising and falling; all at the same time! The Daily Express reports that property prices are rising. The Telegraph reports that they are falling. Both stories relate to April figures.
Why the difference? The Express refers to ONS figures which were compiled by the Department for Communities and Local Government (DCLG) and are one of the two official measures of property prices (the other being the figures produced by the Land Registry). The Telegraph uses the Halifax house price index which is based on their mortgage approval statistics.
Which is correct? They - ONS, Halifax, Nationwide, Land Registry et al - are all correct in their own way. They just use different criteria; mortgages approved but not completed, completed selling prices etc; some statistics are even based on asking prices. The picture is muddied further by relatively small numbers of sales, especially in some sectors, the difficulties of comparing like-with-like and varying performances (such as London) being merged into just one average. We have an article coming.
The Safest Haven?
According to the IPD Rural Property Investment Index, rural property is the safest haven for investors. Why? It's simple supply and demand at work. In the late 1980s, more than 300,000 acres a year were available; that's now down to 125,000 acres. At the same time, demand is rising and being driven by investors seeking a flight from safety from eurozone issues.
Agricultural land has continued to remain in high demand from a widening array of investors. The ongoing period of macro-economic uncertainty and turmoil has underpinned the need for safe havens for investment, and land has been a beneficiary of this trend.' More to come - we are updating our winter 2011 article.
Watch The Cranes
Experienced property investors have long said that 'crane-spotting' is a good way to identify a market on the rise; quite simply, builders are only really going to be building when they know they can sell at a decent profit.
Drivers Jonas Deloitte regularly produces crane surveys for the major cities; you can Google for whichever interests you. We receive and check these regularly and, by and large, it is a useful, early stage indicator to consider as part of your due diligence.
In London, for example, the latest survey suggests a trend. In essence, some 3,700 homes in the pipeline have been recorded over the past six months; down from more than 7,000 in the preceding six months.
'While schemes are progressing to delivery, meaning current completion levels are looking more healthy, this latest research shows a clear decline in the number of new schemes starting. Developers are focusing on the more resilient Inner London areas.'
Auctions - New Figures
Finally... I've been looking at some auction result statistics from the EIS Group which monitors UK auctions. Properties selling at auction in May sold for around 80 per cent of the price of an average home, reports EIS.
2,034 properties changed hands for an average price of £128,466 in May 2012. The price of the average house price in England and Wales is £160,417, according to the latest official figures for house sales in April from the Land Registry.
EI Group's David Sandeman says, 'Lots offered and sold in the month were both up on last year by 7.3 per cent and 8 per cent respectively whilst larger increases are evident in the rolling quarter and year. The residential property auction market once again produced a strong set of results, with positive gains seen in every metric measured.' If you missed yesterday's article on buying at auction, do email back.
Iain Maitland www.ukpropertyalerts.co.uk