There's More To Research Than House Prices

If Countrywide’s John D Wood agency wanted to generate interest in its house price index for prime central London it has succeeded – perhaps not for obvious reasons.

This week I’ve been contacted, off the record, by agents from three rival London agencies about the JDW figures, available here. The trio were all critical of the volatility of JDW’s findings which suggest that, at different points this year, some parts of central London saw average rises of 30%-plus over the preceding 12 months. At other times, some areas saw similarly dramatic year-on-year falls.

Many central London agents say some individual homes did indeed have year-on-year rises of 30% (or even higher in exceptional cases) although most believe these values are now falling back. But of many agents I have spoken with, none believes the average rise or fall is as typical as JDW suggests; in particular they say this ‘switchback’ of big rises and big falls does not seem right.

A good comparison is Knight Frank. The firm never knowingly underselling house prices and even its latest index puts prime central London's average rise at about 15%.

As with any index, the methodology is all. “Our indices use pounds per square foot from the date of exchange and this can be a month or two after terms are agreed” says JDW’s head of valuation, James Wyatt. JDW feeds its data through LSE and Oxford academics and Wyatt is insistent that the end result is “statistically bullet-proof”. He is generally dismissive of other agencies whose more measured results for prime central London merely express “agents’ sentiment rather than real figures”.

Like most journalists – and, I bet, most agents and surveyors – I am not qualified to comment on the appropriateness of the methodology nor the validity of the results. But, as with all things property, there are other things going on behind the scenes.

Hamptons – Countrywide’s recently-acquired agency, seen by many as targeting a similar market as John D Wood – has just appointed a new research person and it may be that JDW wants to be seen as its own boss in this activity, so is choosing a very individualistic approach to its research. This may be just in case Countrywide tries to pool some resources across its many different brand names (as is rumoured to be happening early in 2011).

In any case, research as a discipline is being looked at very closely right now. In some other agencies there are concerns that research departments may produce the ‘wrong’ results in the current mostly-pessimistic market. One top end national estate agency recently decided not to publicise one of its research reports, which showed – in a North Korean-stylee – the ‘wrong’ predictions for the market.

This has not been a worry to Savills’ large research department, nor the more industrial research teams at CBRE and Jones Lang LaSalle, which have all been forthright at publicising the bad news as well as the good news. Journalists have loved them as a result – agents have been less enthusiastic, at least sometimes.

In the meantime, what do we make of the JDW figures? They show a 32% increase in prime central London in the year to the end of September. I don’t know – I’m only a journalist. Do they seem right to you? Or do they just demonstrate that research can mean whatever you want it to mean, so long as you ask the right questions?

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