If you’re in the property game, you’ve probably already heard that a new index will be introduced this summer which will better reflect the true value of homes in the UK.
At the moment, the house price index – and there are many – can vary depending on who you prefer to follow and what metrics they use. For example, the Halifax may tell you the price of an average home in Britain is around the £214,000 mark, Rightmove reckons it’s around £299,000 while the Office of National Statistics (ONS) puts the figure at around £292,000. The variance is often accounted for by regional fluctuations in price and whether London and the south-east are included or not – but it’s no wonder the average seller is so often baffled when it comes to where they should pitch their property.
However, as from June, the Government has decided that the ONS will combine its data with the Land Registry and with the Council of Mortgage Lenders to give a better and more accurate picture of just what “average” homes are worth. Indeed, they’ve already begun to experiment and, as you may expect, the figures they’re coming up with are different again to those we’ve been reading about so far.
Actually, the values are substantially lower. Using December 2011 as an example, the new methods would give an average house a price £37,000 lower than the one published at the time (£222,000). Why? Well, it’s because the methods they will use to calculate the “average” will reduce the impact that exceptionally high value homes have on the figures.
Nevertheless, there is an understandable concern that, when the index is published for the first time in June, there is bound to be a perceived drop in property prices.
The key word to emphasise though is “perceived”. In real terms, the value of property across the country will not have fallen off the edge of a cliff at all, despite what scaremongers may try to tell you. If your home was worth around £200k before, then there’s every likelihood it will remain at around that price in July. The lower average house price is not the result of a sharp decline in values, just a new method of calculation.
So, if you’re round the table at a dinner party or in the pub with friends this summer and the conversation switches from Euro 2016 to property, remember there’s probably no need to join in any panic which may ensue if people start to discuss a fall in average prices.
Oh … and if you would like an idea of what your home is worth just click on this link and we’ll get back to you: http://www.esaleuk.com/free-valuations/