Property Portals Push Disparity in UK House Prices

Inaccuracies in the calculation of house prices in the UK are inflating the property bubble in the country, according to a report.

Data analysis organisation Agent Analytics said that unsold and overpriced UK properties are skewing pricing data. It added that the disparity between different major gauges of house prices is widening.

"Some portals suggest the average asking price for a home in the UK is £252,418 (€301,164, $407,138) when other indices state the average price of properties sold is £167, 063," it said.

That represents a disparity of 47.4% nationally. Home sellers would need to sell for at least 40% more than the actual asking price if they are to get anywhere near the price the portals suggest, according to Agent Analytics.

The organisation lists the main reasons for the disparity between the house-price measures.

1. Missing Data

Agent Analytics said the monthly HM Land Registry figures exclude new builds and properties that are being sold for the first time since 1995, while they will be included in the figures of other property portals. It added that some 59% of properties listed on a portal would not have shown up in a monthly HM Land Registry report.

"The 41% which would have been reported by a HM Land Registry report were 11.5% cheaper than the whole, thereby giving further fuel to the house price portal/HM Land Registry divide," Agent Analytics said.

2. Asking Price Mismatch

Some house price portals do not take into account an average 28.7% reduction in initial asking prices during the marketing period of a property. In addition, property portals such as Zoopla quote figures based on all stock, not just the new-to-market houses. The inclusion of properties remaining unsold over a long period would influence the house price calculation, according to Agent Analytics.

3. Top End Unsold

Agent Analytics also noted that top-end properties that have a higher weighting in price calculation significantly inflate asking prices. These properties, priced above £5m, see price reductions later on. There are nearly 1,300 properties currently listed in London with an average price of more than £5m, according to the report.

4. Top End Multiple Listing

Multiple listing also contributes to pricing disparities. Agent Analytics said house price portals primarily use a mean average basis of calculation, so the effect of this multiple counting is very significant.

House Price Bubble

The UK housing market has recently witnessed steady increase in house prices on the back of aiding programmes such as Help to Buy and Funding for Lending.

However, a number of housing experts warned that the schemes would result in a housing bubble given the supply-demand mismatch in the country.

Chancellor George Osborne said earlier the concerns are baseless and his flagship Help to Buy would contribute to the housing market's strength.