Alison Beech, business relationship director of Valunation, said that, while indices have some use as a general benchmark, they are irrelevant in terms of what is currently happening in the housing market.
Responding in this week’s Mortgage Solutions Market Watch, looking at whether it’s time to scrap national house price averages, Beech argued that many indices merely reflect the market from three months’ previously, given they are based on completion data.
In addition, she said they cannot take into account local market changes that deeply affect prices, such as unemployment levels, or influential factors, such transport links and crime levels.
Beech said: “As a general benchmark of UK market variations over any given time period, I’ll grant that indices have some relevance.
“However, as an indicator of real-time market activity or property values, they are irrelevant. As a guide to value for an individual considering whether to buy or sell, I’d go so far as to say they are highly misleading.
“To have any use at all, an index would need to show local variations and the range of movements across the whole market. Even then, they would be of fairly limited application and use.”
To read Alison Beech’s full response, along with Acadametrics and RICS’ view points, click here.
