House Prices A True Reflection

I am engaged in a never-ending struggle with my inbox, receiving over 100 emails a day. Staying on top of them is like clearing the Augean stables. Of those, many contain the term “house prices”.  The first one is something like: how much a new Waitrose can add to the value of my home. The second is commentary about the various house price indices released each month. The most obvious comment to make about these indices is that they are all statistically flawed. Some measure only sentiment, not actual transaction prices. Some measure only property bought with a mortgage from a particular lender. There are geographic biases. And they all suffer from the fact that every property is different; it is not an asset class that lends itself to indexation. But nobody ever says that. Instead, there are various explanations as to why prices are either not going up, or going up more in some places than others.

Lately, there has been a drop in transaction volumes too. Most of the theorising does not add up. Take the number one culprit: “uncertainty” over Brexit, the general election or both. Intuitively, one would think there might be something in this. Houses are just about the biggest-ticket purchase most people ever make. You wouldn’t want to buy one just as the market turned south. But more people voted for Brexit than not, so I cannot see why they would regard it as a reason not to move to a new house. And for every know-it-all trying to time the market to perfection, there is a couple with a new baby on the way who need to trade up. Or a bereaved family with a big inheritance tax liability that needs to sell.  New jobs opportunities up and down the country, families needing new homes.  I doubt the status of the Brexit negotiations or the soap opera in Westminster are at the top of their minds. And according to the big housebuilders, the referendum and the general election has had little impact on their activity.

The housing market in our country has always been like a Mexican standoff between buyers and sellers, and it is the abilities of Lock & Key, whose value is not to be underestimated and who acts as a conduit between the two that can make the real difference of moving or not.

Nigel Fitzgerald Managing Director