For months it has been the biggest question mark hanging over the property market. Since the government announced its intention to make it compulsory from June 2007 for everyone selling their home to fork out for a home condition report, agents have been pondering how homeowners would react.
Would sellers dutifully pay up the estimated £600-£1,000 that the survey would cost? Or would many of them rush to put their properties up for sale just before the deadline, leading to a glut and destabilisation of the market? Even more intriguing was what would happen after June. With a predicted shortage of inspectors, would some of those people who wanted to sell be unable to do so because of delays in finding someone to write a report for them? We will never know. Last week, in one of the U-turns that are rapidly becoming routine, the government said the report would not be compulsory, after all.
The new Home Information Packs will still come into force on schedule, but will merely contain an energy efficiency report, council search information and documents about planning permissions and building certificates. The survey component will be voluntary, not mandatory.
The arguments were continuing to rage this weekend about the wisdom of the move, announced by Yvette Cooper, the housing minister. Critics — championed by the Conservative party — have been jubilant at the removal of what was dismissed as an unnecessary extra burden on sellers.
But the climb-down was condemned by consumer groups who believed the reports would slash the number of sales that collapse under the current system.
“This half-baked compromise will result in something of little value, but of real expense to consumers,” says Nick Stace of the Consumers’ Association. Buyers, he says, will be vulnerable “just as they make the biggest purchasing decision of their lives”.
At least, however, the decision removes one area of uncertainty from a housing market already reeling from conflicting price indices, some showing record increases while others suggest a widespread slowdown.
“It’s a massive turnaround, but it stops next year’s market going topsy-turvy,” says Liam Bailey, the head of residential research for estate agency Knight Frank. “There would have been a selling frenzy early on, then perhaps very few homes for sale for months after the deadline.”
Schizophrenia is gripping the housing market — yet again. Last week, homeowners had cause for cheer with the announcement by Rightmove, a leading property website, that the cost of the average house in Britain rose by more than £6,000 last month. Yet a few days earlier, the Halifax had told us prices dropped 1.2% during much the same period.
So with a new index almost every working day, who is right? All of them — or none? There are now seven leading price indices purporting to give snapshots of the national and regional markets each month or quarter. Another dozen or so look at specific sectors such as expensive country houses or inner-city apartments.
The problem is each one takes a snapshot at a different point in the market cycle. Some look at asking prices, reflecting optimistic sellers and estate agencies.
Others analyse mortgage loans to buyers whose offers on properties have been accepted. The government indices work only on completed sales, so give an excellent historical record, but may not pick up fast-moving changes that have just happened. To add to the complexity, some cover the entire UK, others just England and Wales.
“Any one index for any one month isn’t very useful,” warns Phil Spencer, the Sunday Times columnist who runs Garrington Home Finders, a buying agency, and presents Channel 4’s Location, Location, Location. “You must look at a trend, and even then be wary.”
Even the experts who create indices issue a health warning. “There are 24m homes in the UK. About 1.8m go on sale each year,” says Richard Donnell of Hometrack, whose index is one of the most closely watched. “One month’s index will look at one-twelfth of that number at most. So it could be that one monthly result will be based on 2% or 3% of the true housing market. You’ve got to be cautious.”
So what is really going on? A careful look at most indices shows common factors: every one shows a sharper than expected increase in London areas such as Mayfair, Holland Park, the City and the West End — the highest rises for 10 years, claims the Royal Institution of Chartered Surveyors.
Prices in parts of the southeast and southwest, especially those within commuting distance of London, are benefiting from the ripple effect. The market in much of the rest of the country has been cooling, however, reversing a trend seen in the past three years. Even the optimistic Rightmove index shows price falls in June in the northeast and the East Midlands.
All this is music to the ears of Chris Darnell, 56, a business-development manager, and his wife, Sandy, 51, a make-up artist. The couple considered selling their Grade II-listed, six-bedroom Jacobean house at Ash, near Guildford, Surrey, last year, when the last of their four children left home.
But they held back, delaying until it looked like the mood in the southeast was more positive. Now is the time to move. “We waited until the market moved favourably, then wanted to capitalise on the increases that the indices and the press spoke about,” says Sandy.
The Darnells’ house is for sale for £975,000 with Strutt & Parker, 01483 306 565, www.struttandparker.com
Number crunching
Rightmove.co.uk: measures asking prices — but not actual sales — in England and Wales.
Pro: bang up to date.
Con: may be overoptimistic
Home.co.uk: a new index based on sales prices.
Pro: up to date.
Con: covers only England and Wales
The Halifax: measures prices of homes for which it provides mortgages. Pro: takes into account local and seasonal differences and deals with whole UK.
Con: only covers property bought with mortgages
The Nationwide: similar to the Halifax.
Pro: good regional breakdown; covers all UK.
Con: based only on mortgages
nHometrack: uses data from 3,500 estate agents’ offices. Pro: based on actual sales data. Con: relies on agents’ accuracy and honesty
The Department for Communities and Local Government (DCLG): a monthly index based on completed transactions and data from mortgage-lenders.
Pro: based on completed deals.
Con: can be out of date when appears
Land Registry: quarterly index based on completed house and flat sales in England and Wales.
Pro: looks at every purchase after completion.
Con: some data can be five months old
