Confusion as house prices plummet by record amount – or rise slightly

In the biggest monthly house price drop on record, house prices fell 3.6% in September, the Halifax reported.

But in an extraordinary development, a report out this morning – the Acadametrics survey – claimed housing market activity picked up in September by 3.4% and prices rose by 0.2%.

The confusion underlines why the Government has called in its chief statistician to report on the huge divergence between the house price surveys.

The Acadametrics report was distributed by the PR firm Wriglesworth, which strongly defended its findings – despite the fact that it was also sending out press releases on behalf of other clients agreeing with the findings of the Halifax report.

One, Alan Cleary, of Precise Mortgages, was quoted as agreeing that transactions had gone down in September.

Asked to comment, Wriglesworth said there were ‘Chinese walls’ with different PR executives representing the views of different clients.

In defence of the Acadametrics report being so at odds with Halifax, the PR executive said that the Halifax does not include cash-only purchases, whereas Acadametrics does.

However, the Land Registry survey does include cash purchases, and has recently been putting average house prices at much the same level as both Halifax and Nationwide. Yesterday, Halifax reported that the average price of a home in the UK is now £162,096. The fall equates to an average drop in price of £6,000.

But this morning, Acadametrics reported the average price of a home is now £223,965 – an enormous difference of almost £62,000.

Nor does its finding that housing transactions rose in September appear to tally with what some estate agents are saying.

Yesterday, Hamptons International said that its transaction levels in September were down an astonishing 20% on August.

Adam Challis, head of research at the firm, said the Halifax statistics were “worrying figures for the housing market”.

He said: “Government austerity measures have been harmful to market sentiment. Across our network, we observed some weakening of the market over the summer which continued into September. Transaction levels were down 20% last month alone.”

He said there was a “pause” in market demand and he did not expect the market to adjust to the “new normal” until next spring.

According to Halifax, the fall means that house prices are now just 2.6% higher than this time a year ago, and are now 0.9% lower than three months ago.



The Halifax’s economist, Martin Ellis, said: “Prospects for the housing market remain uncertain. Earnings growth is expected to be very modest over the next year, tax rises are on the way, and more people are putting their homes on the market. These will all be constraints on the market, dampening housing prices.

“On the positive side, we expect interest rates to remain very low for some time, which will underpin the improved affordability position for home owners.”



The Halifax report also draws attention to mortgage approvals, which the Bank of England said fell to their lowest level for six months in August, to 47,372.

Ellis said that low transaction levels increased the “difficulty of getting a clear reading on the current state of the housing market”.

At the RICS, Simon Rubinsohn, chief economist, said: “The latest numbers from Halifax provide further evidence that house prices are easing. That said, the 3.6% drop in this index in September undoubtedly highlights the extent of the softer trend in prices.

“Significantly, the annual rate of change in prices in the Halifax index at 2.6% is not far away from the equivalent figures from Nationwide Building Society (3.1%).

“RICS expects prices to slip a little further over the coming months.”

Peter Rollings, managing director of Marsh & Parsons, said the Halifax survey was not “the story of London”.

He said London prices had reached a plateau, but had not gone down, held up by strong demand from cash buyers.

However, Cluttons and Knight Frank both disagreed with him. Knight Frank said central London house prices had fallen for three months running.

Cluttons said central London house prices had gone down slightly (by 0.2%) and would fall further because demand had weakened and the number of properties on the market had gone up.

Andrew Stanford, head of Cluttons’ residential professional division, said: “Whilst potential applicants continued to register during the third quarter, in reality demand was low.

“There has been little activity or interest in property above £3m or for secondary stock which, as a consequence, is likely to remain on agents’ books until a price adjustment is made.”
(Estateagenttoday.co.uk)

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