Why are experts always wrong about house prices?

Over the past two generations, those with property in the UK have been unwittingly transformed from owners to investors. This makes no sense, and has led to a lot of baby boomers feeling smug and clever when in reality they’ve just been lucky. However, the effect has been lasting and means property owners are now a politically valuable group – and that what your house is worth has disproportionately strong influence on how rich you feel.

And of course, now that everyone has an interest in the value of their home, there are plenty of supposed experts willing to pretend they’re helping you look ahead to see what will happen in the market. It’s particularly prevalent at this time of year, i.e. the beginning – and all the more keenly watched this time because of September’s Tory Tea Party and subsequent turmoil.

Culture wars have invaded the property space, with buying agents mostly pontificating that values will drop and agent-sponsored indices saying the opposite. All are chasing column inches and airtime and appeal to ever more polarised audiences, as seems to be the modern way. Renters blame agents for increasing values; homeowners become case studies complaining about interest rates going up. Even the government is in on the act, whacking landlords over the head in a vainglorious and misguided attempt to evict them from the market and usher more first-time buyers (aka voters) into properties instead.

This rabid consumption of property news is fed by a growing plethora of pretend experts who have never, in my 40 years in the market, got it right. Many, such as Savills, go to great expense, being commissioned to do research and at least trying to justify what they say might happen – but even they would admit that past performance is no guarantee of future performance. Most blithely adhere to the Fred Pontin principle of making positive sounds in the hope they’ll be right – and all this without factoring in ‘black swan’ events such as Covid or, to quote Donald Rumsfeld, known and unknown unknowns.

I groan at headline forecasts – and there have been some shockers – and long for a return to common sense. Your house is your home, not a part of your net wealth, and when you borrow money it’s vital to adhere to the Mortgage Market Review tenets and check you could afford higher rates on the loan. Given moving is so expensive it also makes sense to assume you might have to live in your home for ten years, so plan accordingly, allowing for growth of the family.

If it was me, I’d also avoid making any plans based on anyone’s assessment of what house prices will (or won’t) do in the future.