What Is The Validity Of The Predictions About House Prices In Light Of The Regional Changes?

If we refer the report published by the BBC about the real estate prices, some unique and interesting things come out.

The report is quite comprehensive and covers the factors after removing the disparity caused by the rate of general consumer inflation. Hence, it becomes more realistic and objective.

The report may be a surprise to those who think that there is not much scope for real estate beyond the boundaries of core London and surrounding areas.

If we look at the report at the macro level, then the East and South parts see an increase in prices whereas the West and North see a downfall in the recent years.

However, at micro levels, there are some location-specific disparities.

Microanalysis reveals some interesting things

Detailed study of the report shows that though the prices of properties have increased very fast in some areas of Wales and England (greater than inflation sometimes), there are areas where rates came down drastically.

Take the example of Dover (St Radigands in particular) where the dip in the price was 15 percent which is phenomenal.

Similarly, Badgers Mount recorded a drop of 15 percent, and Bucks showed an unbelievable decline of 35 percent.

It is very interesting to know that the surrounding areas of the specific places mentioned here showed a good increase in property rates.

On the contrary, some areas in the North of England and Wales showed a dip in the property rates whereas the remaining parts recorded remarkable price growth.

Why are there different trends at micro and macro levels?

Well, it is very difficult to explain the reason behind such a unique behavior, but in some cases, it may be due to the socio-economic factors.

For example, crime is a constraint in some areas. In some parts, infrastructural development is missing. Hence, the property rates do not reach up to the desired levels in spite of efforts made by marketers.

There is one more very important factor which gets often overlooked by the analysts; it is the change in the property mix.

Suppose in a particular area the large houses were very popular once upon a time. After a few years, people preferred smaller, independent houses. Naturally, prices of such properties are less than the large villas.

By looking at the average price, people think that the house prices have fallen. However, in reality, they haven’t.

Hence, property market experts emphasize on looking at the rates holistically and not discretely.

To get a fair idea about the ups and downs in the property rates, one should compare based on different property types. What is happening for apartments is different than what is happening with detached properties.

Hence, an ‘apple to apple’ comparison can only give the right and unbiased picture.

Other than the factors mentioned earlier, aspect like population distribution, migration rates, employment levels, availability of mortgage and exchange rates, etc. are also deciding factors.

Any prediction can’t be true unless all these big and small aspects are taken into consideration.