Tuesday, June 14, 2011
House prices - will Google ruin your dinner party?
Way back in the dark ages, before I "saw the light" and gave up all kinds of power, money and status, I used to host, and be invited to, some excellent dinner parties.
Over a decent rack of lamb and bottle or two of St Emillion the conversation would inevitably turn to house prices. Of course everyone would have an opinion as to where we were in the property cycle and for how long the boom/crash would go on for (no-one ever talks about periods of stagnation).
Many of my friends were also in the property industry and would be happy to quote figures from one of the myriad conflicting housing reports and indices (government, agents, developers, banks, industry bodies et al).
The historic beauty of these reports is that the analysts and research teams always contradicted each other - leading to an endless supply of data to stimulate debate and conversation. You could say what you want and always be able to find some obscure stats to back up your argument.
Now though, it looks as though big, bad Google could well end the debate and put all those well paid analysts and researchers out on the street.
No less an authority than the Bank of England has a whole section in their quarterly bulletin about using internet search data as an economic indicator. You can read the article here.
So...can Google predict house price movement?
Well, the Bank of England are, typically, cautious about giving us a one word "yes" but they do say that search data outperformed other traditional economic indicators. Their researchers found that searches for "estate agents" tended to peak a month ahead of rises in house prices.
We've been waiting for centuries for a single, authoritative house price index....we still struggle to say with certainty what house prices have done in the past.
Can Google now skip a step and tell us what they're going to do in the future....