House prices: why most of the property platforms get it wrong.

Working out the value of a house or property is not at all straightforward.? Given the number of websites out there that purport to offer a quick estimate of house prices or property value, you would be forgiven for thinking that a computer algorithm would be capable.

Land Registry collect and publish actual house price sales data and also an updated house price index, which provides property value changes in a given area and by property type - so surely simply combining a ‘last sold price’ figure and applying the Land Registry House Price Index should provide a formula with a reliable result ?? Well, in a lot of cases it works well and does provide quite a reliable estimate.? But there are of course exceptions to this rule which means that property platforms’ predictions can be very wrong.

We should at this point remind ourselves; ‘What is Valuation’?

A simple RICS definition is; ‘the market value of a property is the amount that a willing buyer and a willing seller would agree upon in an arms-length transaction, where both parties are knowledgeable and act without compulsion’.

However, we disagree with this definition for the following reasons.? Imagine that a buyer specifically wants to buy a particular property and is prepared to pay over the odds for it.? Or a seller is desperate to sell and sells at a price that is ‘below market value’.? In these instances, the transactions do not represent a true reflection of value.? Furthermore, when property and planning platforms then use that data - those types of ‘rogue’ transactions - to predict a future value, they will be off the mark.? Similarly, properties that have sold and then been redeveloped or extended, are not capable of being valued by a standard computerized formula. We find that this is the failing of most platforms like Rightmove or Zoopla.

Other platforms like Searchland or Landinsight that rely on the same methodology (and Rightmove data) are of course also flawed in their accuracy when predicting property or house price value.

So what can be done?? We found that the property and planning platform landcycle.com offers an honest and clever alternative.? When assessing value, they use a complex series of datasets and algorithms to try and make valuations estimates.? The most important thing they do is state that if they cannot collect the datapoints to make an accurate estimate, they will not provide one.?

Landcycle.com has cleverly managed to eradicate the outliers in the data, by blending more data, which provides a more rounded prediction.? It accounts for overvalued and undervalued ‘rogue’ transactions.

Its of course worth noting that no property tool can always be accurate all of the time.? But they can give you a good indication of prevailing values and a bird’s eye view of what property prices are in a particular area. ?The best part, landcycle.com is a license free property platform so you can check it out for yourself without spending a penny.