Don’t believe the hype: why the ‘rise’ in property prices may not matter
November 19, 2013
Are you one of the lucky few UK residents hoping to purchase a property in 2014? If so, no doubt you are currently poring over the numerous house price reports featured in the national media on a daily basis and trying to decipher what on earth is going on.
Lately, the government and financial markets seem to have decided that after a few years in baggy jeans and shapeless jumpers, the property market is sexy again. Some areas of the media have joined in, with steamed-up news stories about house prices in London rising £50k in a month, and various debates about the housing shortage and whether ‘Help to Buy’ is actually going to help at all.
What these reports often have in common is the use – some might argue misuse – of statistics. The organisations and media outlets creating these stories might appear to be purporting them for the help and general information of us all. What they are often actually doing is fulfilling their own agendas.
For example, the recent steamy story above was reported in such a way that it seemed at first glance that the prices fetched by houses had risen by £50k, or more than 10%, in a month. What the survey actually said was that prices asked by vendors had risen by that amount, not completed transactions.
Regular followers of the HomeOwners Alliance’s House Price Watch will know to be wary, and have most likely found that often the asking prices in these indices actually mean nothing – it’s what people are prepared to pay which has meaning.
A recent survey from Ipsos Mori for Inside Housing found that, contrary to the political belief that British people like house prices to rise, presumably in order to feel secure about their futures, a majority believe rising house prices are bad for them and for the country as a whole. The poll showed that 23 per cent strongly disagreed that house price rises were a good thing, and a further 34 per cent tended to disagree. Just a fifth believed rising house prices were positive.
Most of us need a deposit to buy a house. We need enough income to support our mortgage payments if we are ever going to own our own home. But wages haven’t kept up with inflation, house prices are high and not everyone has a chequebook for the Bank of Mum and Dad. Unless you are downsizing or an investor in property, it seems rising house prices could actually present a pretty scary spectacle.
So if you do decide to buy in 2014, don’t be bullied by the statistics lurking in the back of your mind. Make sure you are happy with the price. Amidst all the current noise and debate, it’s important to remind ourselves that houses are only ‘worth’ what people are happy and able to pay for them. Misleading reports and statistics may succeed only in enlarging the property bubble, and thereby stymie those of us who actually do want to buy ourselves a home.
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- How do I find the perfect property?
- Top Tips – things not to forget when viewing a property
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