Rightmove house price index slammed
Ed Mead, director at Douglas & Gordon, challenged the property website after it claimed that London property prices had grown by 10% in October.
He slammed Rightmove’s statistics as “absurd” and “seriously damaging to the property market”.
The figures quoted in the House Price Index are not seasonally adjusted and September is traditionally a volatile month as new listings rise after the August lull.
A better barometer of the market is the quarter-on-quarter figure which provides a better gauge of the underlying trend. The quarter-on-quarter figure revealed a 5.6%, or a 1.8% monthly increase.
This led to Mead warning Rightmove that it should be careful about what it is telling the market as it could risk facing “serious long term consequences”.
Whilst Rightmove were keen to address Mead’s concerns they said the Index was suitably robust.
Matthew James, head of trade marketing & communications at Rightmove, said: “The Rightmove House Price Index is a long-running, respected index of the asking prices of new-to-market properties.
“Around 90% of estate agents in the UK advertise with Rightmove and that means are fortunate to have one of the largest samples of property of any index in the UK – in this case, nearly 130,000 properties.”
But it wasn’t just the statistics that gave Mead a cause for concern.
He also pointed out comments from Miles Shipside, director at Rightmove, which he said he felt were sensationalist.
In response to the Index Shipside said: “Over the quarter you’re looking at a rise of roughly 2% a month in the capital which is clearly unsustainable.
“Some agents report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare.”
But Mead was unsure of the usefulness of such comments.
He said: “The sensationalist element in any statistic is the one that ends up being used, of course.
“But when someone in a position of responsibility turns round and says that asking prices have gone up by over 10% in one month, and then allows such a stat to be used as ‘house prices have gone up 10% in a month’ they should surely be looking askance at it.
“To then follow it up with a senior director’s comment, quoting some brash agent, claiming ‘the cupboard is bare’ simply exacerbates the problem.”
But Rightmove defended their comments and said they were not looking to make headlines with the Index but provide a balanced commentary.
James said: “We always aim to provide a balanced and considered commentary as part of our monthly report – though this doesn’t always make a great headline!
“The commentary we provide in our reports, as well as in interview across various media, encourages people to take a longer-term view of the figures rather than simply taking one month’s figures in isolation.”
But it’s not just Mead who is worried about the increasingly alarmist tone of statistics bombarding the industry.
Rob Clifford, chief executive of Century 21, said that whilst his firm was a partner of Rightmove he thought the rhetoric about the market needs to be toned down.
He said: “Century 21 is a partner of Rightmove and benefits from the reality that it is the portal of choice for many housebuyers.
“The statistic suggesting that prices are up 10% in London in October is of course flawed; probably no more scientific and representative UK-wide than pointing out that my butcher has increased the price of sausages by 18% in Derbyshire this month.
“Market conditions are improving and encouraging, but let’s discourage rhetoric and fluff in order to keep buyers and sellers realistic about their own prospects in their particular local market.”
However Trevor Kent, former president of the National Association of Estate Agents and owner of Trevor Kent Estate Agency, said agents may want to rember who they are selling the properties for.
He said: “We are seeing considerable strength in the market in the Home Counties. As such I imagine the London market is also experiencing such strength.
“Agents must remember that they are selling the property for the owner not themselves. If the broker instructs on a price then it is their role to work to that price.”
But Mead suggested that Rightmove could provide a more balanced set of statistics if they were to “canvass the agents they serve”.
And Mead’s call hasn’t fallen on deaf ears.
Rightmove’s Matthew James said: “We are always interested in the views of member agents from across the country and welcome every opportunity to do so.”
Rightmove director Miles Shipside also contacted Mead last night to address his issues and the property website has now updated its website’s blog section to reflect the Index’s use of asking prices.
However Mead said: “It may be a case of closing the barn door after the horse has bolted.”