"Average House prices"

kriss_boy

How exactly are 'average' house prices calculated?

Is it simply the mean value for houses sold within a particular period, irrespective of the property type/size?

If so 'average house' prices arent a particularly accurate measure of the intrinsic value of property when the sample data is so low.

ie, it would only take a couple of big sales to skew the mean. Therefore when dont we analyse modal or median averages?

HAMISH_MCTAVISH

kriss_boy wrote: »

How exactly are 'average' house prices calculated?

Is it simply the mean value for houses sold within a particular period, irrespective of the property type/size?

Sorry mate, you're about 10 months too late with this particular bear meme that has been comprehensively discredited on numerous occasions.

The answer, in case you're still wondering, is that it depends on the index.

Some use median, some use mean, some use hedonic regression, some mix adjust.

But all are showing significant, and broadly similar, price rises over the last year. :cool:

If so 'average house' prices arent a particularly accurate measure of the intrinsic value of property when the sample data is so low.

The sample data is 'lower' than it was, but that in no way means it is too low to be statistically significant. It is a fallacious assumption to say that because we only have one million sales a year instead of two million, the data is somehow skewed by this. As an example, pollsters can accurately guage the results of an American general election with just 1000 responses. Increasing the sample size to 10,000 responses, or 100,000 responses, does not improve the accuracy of the data in any meaningful way.

ie, it would only take a couple of big sales to skew the mean. Therefore when dont we analyse modal or median averages?

We do analyse median averages. But the results show similar price rises. And even those surveys which do use mean, like RoS, exclude the most expensive and cheapest properties to ensure such skew is averted. And again, the sample size is still sufficiently large to ensure that a couple of properties don't skew it.

abaxas

The answer is...

No-one knows as the data of all the indexes in cleaned and full methodology is never provided. Hence, all the indexes have no scientific basis and would not pass further scrutiny.

It's up to you if you want to believe them or not. They are not fact, they are simply a number where the only people who know that it actually means are the people compiling it.

chucky

abaxas wrote: »

The answer is...

No-one knows as the data of all the indexes in cleaned and full methodology is never provided. Hence, all the indexes have no scientific basis and would not pass further scrutiny.

It's up to you if you want to believe them or not. They are not fact, they are simply a number where the only people who know that it actually means are the people compiling it.

despite this being true all of the indexes have the same trend lines and tell us the same thing.

it must be one hell of a conspiracy for all the indexes to be 'fiddling' these indexes together for them "not to pass further scrutiny".

if these are the kind of things you believe are true, then the cult has done a very good job with you. :eek:

abaxas

chucky wrote: »

despite this being true all of the indexes have the same trend lines and tell us the same thing.

it must be one hell of a conspiracy for all the indexes to be 'fiddling' these indexes together for them "not to pass further scrutiny".

if these are the kind of things you believe are true, then the cult has done a very good job with you. :eek:

I prefer to deal in fact rather than statistics.

However I agree i am in the cult, the cult of fact. I'm happy to be in it.

chucky

abaxas wrote: »

I prefer to deal in fact rather than statistics.

However I agree i am in the cult, the cult of fact. I'm happy to be in it.

so let me get this right - the facts are that each and everyone of those indexes (Land Registry, Halifax, Nationwide and all of the others) that use different methodologies and algorithms have the same trend and have the same conclusion and they're all part of the same conspiracy.

yes i'm sure that cult is keeping you very happy if that's what you'd like to believe :j

carolt

The trouble with all the indices is they only measure what has actually sold not what hasn't.

Thus if of 100 houses in a street, two larger, generally better houses sell for xK but 10 equivalently priced but worse houses don't, the indices - which cannot distinguish between qualities of house (unlike buyers who can and do) - will not reflect that fact. It will only show 2 houses sold for xK. If last year, some of the worse houses sold for x-10K, then the indices will say house prices in that street have gone up by 10K. Whereas what is actually happpening is that the few buyers who do buy are buying better quality and paying - as would be expected - more for it.

Indices can't reflect like for like, because it's only measured in huge categories (if at all).

My experience of the last year is that good houses are still selling, and for more than bad houses would have fetched. (As you'd expect.) But the bad houses aren't selling at all. Hence are not measured. So the bias in what is actually selling at all in such a low volume property market skews the figures.

Until we get back to a situation where the !!!!!! houses are also selling again - and reaching prices as high as 2007 again or higher! - then we cant just make assumptions about median house prices.

It's as though in a small town, everyone bar the bankers lost their jobs in a wave of unemployment. Average salaries might look as though they'd suddenly shot up - but to anyone on the ground it woul be obvious that that was only because most people no longer had salaries at all to enable them to feature in the 'averages' tables.

You couldn't automatically assume that everybody unemployed if employed again would get a banker's salary, could you? - any more than assuming that if all the houses languishing on the market sold next week they'd all reach the same prices as the few good houses that are actually selling.

HAMISH_MCTAVISH

carolt wrote: »

The trouble with all the indices is they only measure what has actually sold not what hasn't.

Thus if of 100 houses in a street, two larger, generally better houses sell for xK but 10 equivalently priced but worse houses don't, the indices - which cannot distinguish between qualities of house (unlike buyers who can and do) - will not reflect that fact. It will only show 2 houses sold for xK. If last year, some of the worse houses sold for x-10K, then the indices will say house prices in that street have gone up by 10K. Whereas what is actually happpening is that the few buyers who do buy are buying better quality and paying - as would be expected - more for it.

Indices can't reflect like for like, because it's only measured in huge categories (if at all).

My experience of the last year is that good houses are still selling, and for more than bad houses would have fetched. (As you'd expect.) But the bad houses aren't selling at all. Hence are not measured. So the bias in what is actually selling at all in such a low volume property market skews the figures.

Wrong, on so many levels.

Some indices, like Acadametrics and Land Registry, do exactly measure like for like by using repeat sales regression (sales of the same house) as the basis for their index. And those indices also show rises broadly similar to all the rest.

Other indices, like Haliwide, DCLG, etc, use hedonic regression. (clustering of properties into type, ie, 1 bed flat, 3 bedroom terrace, 4 bedroom detached, etc)

All of this eliminates most of the basis for skew that you claim above, and what skew that does exist from the one valid point you have (that nicer houses sell for more than crap ones) is removed by the dilution through volume.

Volumes are still huge...... A million houses a year is indeed less than two million houses a year, but it still equates to one house in every 17 houses in owner occupation selling each and every year.

So your point about only "good" houses selling is a bit bizarre, unless you are claiming that a million houses each year are only the "good" ones....... In which case how long do you expect this supply of "good" ones to last?

Until we get back to a situation where the !!!!!! houses are also selling again - and reaching prices as high as 2007 again or higher! - then we cant just make assumptions about median house prices.
.

As has been explained above, it doesn't work like that. The indices adjust this out by using methodologies like same sales regression.

But I will agree that if you're in the market for a !!!!!! house, you can still get a bargain...... And !!!!!! houses will be the last to recover, it's been that way after every boom and bust.

Do you want to live in a !!!!!! house carol? Because if not, it's irrelevant.

kriss_boy

HAMISH_MCTAVISH wrote: »

Sorry mate, you're about 10 months too late with this particular bear meme that has been comprehensively discredited on numerous occasions.

The answer, in case you're still wondering, is that it depends on the index.

So figures indicate property is up 5% since 2007...

...thats complete fantasy.

I could easily prove its utter nonsense but it would be a time consuming exercise.

I was outbid on houses identical to mine for as much as 97K. I bought mine for 84K in 2008. Now theres one at a fixed price of 72K and its been on the market for 6 months.

I could give 50 examples but more importantly there isnt a single sale in my town in the last 2 years that has sold for a price comparable to that of 2007.

HAMISH_MCTAVISH

kriss_boy wrote: »

So figures indicate property is up 5% since 2007...

...thats complete fantasy.

I could easily prove its utter nonsense but it would be a time consuming exercise.

I was outbid on houses identical to mine for as much as 97K. I bought mine for 84K in 2008. Now theres one at a fixed price of 72K and its been on the market for 6 months.

I could give 50 examples but more importantly there isnt a single sale in my town in the last 2 years that has sold for a price comparable to that of 2007.

*sigh*

It's obviously NOT complete fantasy, because the stats don't lie. Prices today may be up 5% on the same month in 2007 in your town, but this may still be well below absolute peak, which only lasted for a month in most places.

But this doesn't mean that every house, in every area in every wee town, is higher than 2007. Some are obviously not. Particularly those cheaper houses in cheaper areas reliant on FTB mortgage approvals. Mortage rationing is still dragging those prices down.

In my town, there are numerous houses that sold in 2007 that are selling again for more today. Lots more that are selling for around the same price. And some that are selling for less. But the ones selling for less are the crap houses in crap areas. The cheapest ones. So up here anyway, unless you're in the market for what most people would consider to be a crap house, it doesn't help you.

IveSeenTheLight

kriss_boy wrote: »

So figures indicate property is up 5% since 2007...

...thats complete fantasy.

I could easily prove its utter nonsense but it would be a time consuming exercise.

I was outbid on houses identical to mine for as much as 97K. I bought mine for 84K in 2008. Now theres one at a fixed price of 72K and its been on the market for 6 months.

I could give 50 examples but more importantly there isnt a single sale in my town in the last 2 years that has sold for a price comparable to that of 2007.

I showed on another thread your town has increased in value (marginally) since 2007.

Your statement is incorrect, a quick search dissproves it

http://www.nethouseprices.com/index.php?con=sold_prices_street_detail&street=BINNEY+WELLS&locality=&town=KIRKCALDY&cCode=SC&year=All&house_style=All&house_age=All&search_radius=&outcode=KY1&incode=2BE

31 Binney Wells 18/02/2010 sold for £102,000

Comparable to: -

2 Binney Wells 26/10/2007 sold for £104,000
11 Binney Wells 03/05/2007 sold for £102,000
62 Binney Wells 29/03/2007 sold for £106,000
32 Binney Wells 28/03/2007 sold for £103,000
etc
etc
etc

Like I showed on the other thread, your area, as is my area, as is many areas in Scotland have stagnated for the last three years.

Some months up, some months down