The Delayed Broadcast Effect: how to decode property data

Pop the champers, folks! On the 15th of November 2023, HM Land Registry (LR) treated us to the latest dance of figures, revealing a modest 0.5% dip in the average UK house price from August. Not exactly the heart-pounding drop we've all been hoping for to make home buying a tad more pocket-friendly. Here's the twist—I don't really bat an eye at the LR House Price Index (HPI), and let me spill the beans on why.

Imagine you are watching your favourite sport on the telly. Mine is motor sport, so lets go with Formula 1 racing. You're watching the race and you know that your friends are also watching either at home, or on their devices, and one of your friends actually happens to be at the race venue, lucky them.

In spite of the TV people saying that the broadcast is live, there may still be technical reasons why you could still have a delay, a lag, to the live stream. A few minutes after the end of the race you, all your friends, especially the one at the actual race venue, all know what the outcome of the race was. Who came first and who else was on the podium. But because of the delay, you would all have seen the outcome at slightly different times. That's the LR House Price Index for you. It covers every transaction, cash or mortgage, across the entire country, but the catch is, it takes months for all the transactions to be registered. It's like the delay in your TV broadcast—everyone knows the official outcome, but only long after the event is over.

Now, similar scenario, you and your friends are watching the same race, but there's a discrepancy in the delay on your live stream compared to your friends'. Annoying, right? They're celebrating their favourite driver's victory through texts, and you're yet to see the final lap.

In the world of property, imagine we had an index which could give us a guide on what is happening in the market before the LR HPI? Well, guess what, we do! Enter the Nationwide HPI and the Halifax HPI. They aren't an exact match for the LR HPI—they don't cover all market data, focusing solely on properties being bought using their mortgage applications. But it's like they're texting you the race results mid-way through the home buying process. Instead of waiting around 6-12 months to see what happened in the property market, they're providing data which is only around 3 months out. Still a lag, but a lot closer to now.

So, during the F1 race, your friends got the results first, but they still didn't witness the race in real-time like your mate at the event did. He had an edge on everyone as he saw it as it was happening. If only there was a property index that gives us a more "live" feel for the housing market?

Companies like Rightmove and Zoopla have attempted it, using listing prices. Then there's the Royal Institution of Chartered Surveyors (RICS) with a sentiment index, based on feelings rather than hard figures, reflecting the pulse of local markets. But this is still an area where limited data exists and what does, isn't that accurate because it is based on the least complete data. However, they can collectively offer one big guide and that is to spot a trend.

None of these indices is gospel, well, except for the LR HPI, but that's old news. The more accurate the information, the longer the lag. The rest can only provide a sense of what's happening at best. Averages, truth be told, aren't the best guide for your local market anyway, they just give a general view of what is happening everywhere. Tracking local movements, chatting with locals and agents, that's where the real feel for your chosen area lies. The research that you can do at ground level is like your mate who was at the race, seeing everything happen in real time. That is where you should be, focussing your attention on your local market.

Empowering you with knowledge, so you can be the one to know what is happening in your local market before all the others! If you're keen to learn how to delve deeper into assessing your chosen area, book a 1-1 coaching session