The latest poll of estate agents by the surveyors body RICS produced the gloomiest set of figures on house price falls in the poll's 30 year history.
According to the latest monthly RICS housing market survey, the seasonally adjusted figure for the difference between the proportion of agents seeing house price rises and price falls was 78.5% in favour of those seeing a fall. That is much gloomier than February’s pretty gloomy figure of 64.1%.
So far so bad. But there are interpretations of these figures, fairly equally balanced, that might lead to a more pessimistic view on what the data means or a less pessimistic one, depending on what you want to focus on.
The first thing to say is that the RICS survey has a good history of tracking trends in the housing market, so it can’t easily be dismissed.
The second thing to say is that it tends to be among the first of the plethora of housing surveys to show which way house prices are moving. So we should not be surprised to see deepening gloom in other housing surveys as they appear.
A third thing, the survey is not in the business of measuring the quantity of shifts in the market, so a lot of agents suffering a little pain in the market registers much more than fewer suffering large amounts of pain. At the moment is appears to be a lot agents seeing small falls – which, in isolation, is nothing much to worry about given the meteoric rise in prices over recent years.
The fourth thing to say, which is related to the third, is that the survey shows a very even spread of gloom over the country. Historically there has tended to be waves of activity and inactivity (normally generated from London) spreading out across the country, which given the style of the survey (measuring the balance between ups and downs) moderates the figures, with regions on the up being cancelled out by regions on the down. The pattern is not that way this time, so the figures, if read without due consideration, could appear to be exaggerating the gloom.
The fifth thing to say is that the figures presented are, quite rightly, seasonally adjusted and so are comparing what is happening on the ground today with the normally buoyant spring activity. Unadjusted figures show 66% seeing falls, 31% seeing prices flat and 3% seeing price rises. So, we can read the headline figure two ways. It clearly exaggerates the gloominess of the figures, but also it highlights the fact that now is the time that the market really should be picking up and it isn’t.
The sixth and perhaps most important thing to say is that comments from agents reported in the survey are not as depressing as the figures might lead a casual observer to think.
The clincher, for me at least, and the seventh point that emerges from the survey and the comments made by RICS spokespeople is that the “house price correction” story has a long way to go before we really have a good indication of how bad things will get.
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