The price of houses in Britain, and the future trend there-of, is a frequent talking point. Rightmove is apparently the dominant website for houses in Britain, and has compiled an index on the price of housing. This index is frequently reported in the national newspapers, and the BBC. An example of BBC story is available here
There is another view. House Price Crash represents that market segment which either take the view that the market is over-bought, or are priced out. They are casting a sceptical and partisan eye over the composition of the Rightmove price index in this discussion thread.
The allegations against the Rightmove index are the following:
- The index appears to ignore misquotes.
The index includes some properties are simply priced incorrectly. The filter is that they ignore properties a certain number of standard deviations from the mean. One example is property listed at £130 million. Such a property would move both standard deviation and mean for the month of listing. The HPC forum turns up large numbers of high-prices properties (as well as a number of properties advertised at £0.)
- Multiple property portfolios appear to be priced as a single property for the index.
Again, these might be ignored by the standard deviation filter, but would move the parameters for the filter.
- The index ignores price reductions.
This is a somewhat subtle. What Rightmove does is simply index new listings. This obviously avoids the awkward subject of price reductions, but is a reasonable way to measure "this month" activity. However, the allegation is that Rightmove does not even include price reductions during the month of measurement, and would mean (if correct) that their index is a measure of seller optimism rather than market conditions.
This is going to be topical. HPC is going to be very noisy suggesting that there is vested interest collusion. And Rightmove is due to IPO in March.
Watch this space.