Improve your local market knowledge with up-to-date property data and research
Every now and again we use our blogs to highlight further ways you can use Homesearch day to day in your business.
This week we want to explain some of the key elements in researching the property market.
Back when we were in the really early stages of developing Homesearch, we spent time asking the public what they wanted from their estate agents (and other property professionals).
One thing was clear, the public have grown to be exceptionally savvy when it comes to researching the property market. Not a day goes by when there isn’t an article in the paper reporting some aspect of the property market, and information providers like the portals make scratching the surface of the local marketplace much easier for the average buyer, seller or investor.
For this reason it is so important that local agencies are well versed in the deeper data, up-to-date analysis of local market conditions. It is one thing to observe market conditions such as recent sales, buyer behavior and time on market, however quantifying the market requires agents to use more analytical methods rather than pure observations.
Median property prices and volumes are of course important, but so are demographic and economic factors as well as local factors such as understanding local town planning and infrastructure plans.
Understanding value movements in the market
There is a wide range of statistics that measure changes in the price or value of properties.
Median prices is the most commonly used technique. Homesearch is the only provider to produce a pricing index which is designed to measure true value shifts in the market rather than price shifts.
Each method of measuring market performance has its own pro’s and con’s.
For example, median prices can be biased by compositional changes in the types of stock that is transacting during the period. Cosy two bedroom flats in the winter in one pocket of a town, versus four bedroom detached with gardens in others during summer.
This is especially the case where a particular region shows dramatic differences in geography such as water frontage or views or there are significant differences in the housing stock.
Importantly, market values and volumes are best viewed as a time series which will provide an insight into the market trends and stage of the property cycle. Ten year sales cycle graphs, for example, highlight the level of change in property prices for a region and also show the volume of sales being achieved from period to period.
Valuations can now take the form of full valuations, desktop valuations or automated valuations.
We all know about traditional valuations.
A desktop valuation is also conducted by a registered valuer or surveyor. However, in this case they do not undertake a site visit or dwelling inspection and is what a number of financial institutions are willing to lend on. Desktop valuations are possible due to the availability of detailed attribute data that provides information about the property and surrounding properties.
Attribute data are things like property type, bedrooms, size, land size, comparables, etc.
An automated valuation or AVM (automated valuation model) is just that – completely automated through complex programming. Homesearch’s AVM is our proprietary “Homesearch Estimate”.
We give an estimate of current value to every property in the UK each month using several of own own estimate indexes to produce the more sophisticated AVM in the market.
Demographic information is the last piece of the jigsaw puzzle.
Demographics can tell a story about the type of people who live within a particular community; are they generally young or old, do they prefer to rent or own, are they family households, group households or singles, what level of incomes are most common, etc.
For many agents, understanding the overall look and feel of a suburb or neighbourhood is essential, particularly if you want to be able to communicate what a place is like to live to any potential buyers or tenants.
A few quick tips:
- Taking the information you find on Homesearch and giving it out to your market is a great way to build your profile
- Before you educate your market, educate yourself. It is inevitable that people will ask you questions and an intelligent response will reinforce your credibility.
- Use Homesearch to establish your knowledge and understanding of the market and then use your local market experience to bridge the gap between the research and current local market conditions.
- Interpreting a graph or table is not something everyone is familiar with day in day out. Always feel free to ask us. We’re here to help