THE MOVING EXPERIENCE
I’ve recently seen a circular from an estate agent inviting valuations and suggesting prices are increasing across the board. There is some truth in this but its much more complex than that. After all, are prices different this week from last week or 2 months ago? When did prices start to increase and by how much?
Statisticians seek to get more precise by using a moving average, but how does that factor in supply and demand? For example, if there are 10 houses of a similar kind on the market and an 11th one comes to the market of similar quantity then that price can’t be too much different from the other ones, can it? Then again it might have some unique selling points like a prime location, the catchment area for a school or it may be that it’s just perfect for someone who wants their relative nearby.
Prices can’t just keep going up though, the market has proved that it is elastic and stretch it too far and it snaps back with a sting. We’ve seen evidence of that from 2007 – 2012. Still, it is true where a certain type of property becomes available and there’s strong demand then you can expect a better price. Remember though mortgage transactions are the main bank currency of the market and that means an independent valuer will influence the final decision and surveyors can be cautious. Also, higher interest rates are on the horizon and they will cool the market down.
All in all it’s less about moving averages and more about moving experiences and those happen when it’s a win/win situation for all parties.