Pinning Down Property Prices For Investors

Pinning down property prices is one of the problems for investors – especially if they are buying outside the UK.

Most house price indices are notoriously fickle and out of date and give returns for an ‘average’ home in a huge region rather than specific properties in real life neighbourhoods.

  • Reason for publication – Many house price indices are published for marketing because they grab free space in the media which lends them authority and gives them prime placement they could not otherwise buy
  • Sample size – Government statistics tend to cover national property transactions, but those from commercial organisations are limited by the size of their customer bases
  • Demographics – Some commercial organisations are regional based, so it’s possible their results are skewed by their customer types or the property values in a specific area
  • Price basis – Estate agents base their property values on agreed sale prices, while lenders tend to use a figure derived from mortgage advances. Governments veer towards completed sale transactions
  • Property type – Giving the average price of a property is generally useless for most investors. First, how is an average property defined? Next, how is the figure transferred between an apartment or a townhouse or villa?
  • Data timing – Some house price indices are notoriously months out of date. These are generally official government publications that trail data from a previous quarter

With all these issues affecting the reliability of an index, the next problem is less than 30 leading markets publish any kind of index.

Where to look for prices

Many of these are by professional bodies or web sites to fill a void left by the absence of government figures.

So where can overseas property investors find house price data online?

One place to look where most of the work is already done is The Economist House Price Index.

The data and graphs look at the latest house price data from 23 countries and can compare the results.

The data goes back to 1975 but is currently only updated until the third quarter of 2013.

For comparing rents, yields and some house prices, try the Global Property Guide, which carries a lot of advertising but has some nuggets buried in the pages.

Meanwhile, France is about to get an almost real-time house price index which goes online from September 2014.

The Prix de l’Immobilier will have a sample base of just over a third of all property transactions across France and will give regional prices split into property types.

Below is a list of some related articles, guides and insights that you may find of interest.

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