Kate Faulkner’s Property Watch versus BBC1!

publication date: May 12, 2009
author/source: Kate Faulkner

Or skip to our own Property Watch and Price Predictions.  To be fair, I was worried, would this be a series of ‘scare mongering’ and poor stats, or claims to get to the ‘truth about property’ which hasn’t ever got there in the past. However, the programme was an OK mix of property stats and stories. The ‘headlines’ were about how prices have fallen and the fear of long term negative equity, then a story about how the falls had affected people across the UK, interspersed with some facts, albeit not so far the best ones to be following the market.
So, at least a good balanced approach. However, there are some issues with the information that they used and certainly some of the research. For example, one survey was from a company called Standard and Poors, which forgive me, isn’t that the same company that gave triple AAA fantastic investment ratings to those awful subprime mortgage loans? Do we really want our hard earned tax payer’s money going to this company? Not sure we do, or would we ever trust any data from this company every again thanks very much!

Here’s our thoughts on the data they did use:-

Land Registry
To measure the falls in the market, they relied on government data from the Land Registry. This is great data, and I love analysing it, but it’s out of date and if they continue to use it, their figures will continue to show a falling market for some months to come. The information is based on ‘sold prices’ which will have come from some offers made prior to Xmas, so it’s accurate, but ‘old’ data in property terms.
Should we still be using Halifax Data?
Other statistics used included HMRC showing an increase in sales in January, good data, but from a very low base. The Nationwide data showed one blip of an increase in prices in March, hardly revealing on its own. The Halifax data didn’t seem to know whether it was going up or down and that’s no surprise, are they really doing much lending at the moment. Is their data robust? I don’t think so, we’ve seen some very strange results recently, so have taken it off our list of ‘surveys to watch’. 

The only real data that did help to show what’s happening ‘now’ was data from the National Association of Estate Agents which showed the number of sales per agent going up over the last few months and coupled with lots of other data, such as information from www.hometrack.co.uk. See our Property Market Update statistics on the Buying and Selling market and what we measure.

Dead Cat Bounce Debate
Are we in a ‘dead cat bounce’ the question was asked! They put this to Professor Andrew Oswald, who believes that this dead cat bounce exists currently, so prices are showing a quick increase which will then be followed by further falls. However, this man was nicknamed ‘Mr Doom’ by many within in the industry some years ago with his constant market ‘doom and gloom’ such as:-

     “I think we are about to go through the great housing crash of 2003 to 2005”. Worst still he said “I advise you to sell your house, and move into rented accommodation” and then he claimed “Panic will then set in.”

However, the last six months have proved people don’t panic. In fact they do the opposite. They batten down their hatches and if they don’t have to move they don’t put their property up for sale, if they do need to move, they rent it out, or drop the price. Perhaps our homeowners are much brighter than Professor Andrew Oswald and other doom and gloom economists appreciate!

Then, our new Property Hero was brought in, the most sensible man in the market. Meet Mr Andreas Panayioyou, who up until 2006, was one of the UK’s biggest residential landlords. He then sold up, knowing the market wasn’t returning to what it had in the past.  His view? Well he’s back investing in residential property because he looks at it from a business perspective. Basically says Mr Panayioyou “yield should be higher than the cost of funds and interest in the banks” and now that’s back, so is the reason to invest.

Finally we were treated to a ‘special survey’ carried out by that company we’re not too keen to support with tax payers money any more, Standard and Poors. Apparently, according to the ‘rocket science’ survey, the younger people want property prices to fall, and the older, home owning public want them to go up. Almost as daft a spend as some of those MP’s expenses.......

People’s Property Stories
Most of the stories were the usual, people who have ‘dropped’ their property’s price by thousands of pounds or even a million. No one checked however whether the properties were ever worth their original asking prices or not and little was made of the fact that some of them had rejected offers from a year or so ago and are currently probably regretting it!

Research we have been involved with shows sellers who over price their properties typically sell for around £8,000 less than they could have done and take an additional six months or more to sell.

What the stories don’t really show, although it was mentioned, is the long term rise and fall of property prices on a regional basis. For example, Wales had one of the biggest property rises over the last 10 years, so its fall was also likely to be higher than other areas. Dublin especially has seen a 52% fall in property prices, but that’s no surprise, banks were giving away 100% mortgages like free pints of Guinness!

It was great to see the smart family who had realised that if they dropped the price of their own property to sell it, they could trade up and actually save money and buy a property that in the future they probably wouldn’t be able to afford. Smart move, but this is old news and has been happening since January this year. It’s actually this kind of purchase that has driven the property market forward over the last few months.
It was slightly sad to see the stately home “Winslow Hall” which hasn’t sold for the last two years. However it’s a confusing picture as they bought it (then we find out it was inherited?) in 1959. It was put on the market at £3 million and has now “dropped” to a mere £2 million. Offers of £1.5 and £1.7 million have been made, but rejected. Worst still the seller is restricting his market further as he wants to sell to the ‘right people’.  Seems to us that the property was worth between £1.5 and £1.7 million last year when the offers seem to have been made, but it’s now worth less. So they either need to stay and sell later, rent it out (not sure about that one though!) or bite the bullet and sell at a price someone is willing and able to offer.

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