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Frequently Asked Questions (FAQs)
 About
the forecasts – general & technical
Neighbourhoods
& forecasts
Operation
of this website
You might also be interested to read more about:
The
historic accuracy of our forecasts
About the forecasts – general & technical
Q1: How do you do your forecasts?
We look for mathematical relationships between present and past prices
of whatever is to be forecast and also between a price to be forecast
and other information, such as interest rates. If we find relationships
that are strong enough to justify an attempt at forecasting, we build
mathematical models of them and use those models to forecast.
Q2: Where do you get the data for the forecasts?
From H.M. Government’s Land Registry, with whom all residential
property sales must be registered. Land Registry prices are calculated
from the average of a minimum of 3 registered sales of property of
a given type (detached, semi-detached and terraced houses, and flats
& maisonettes) in a quarter. The data, which is Crown copyright,
gives quarterly average property price information since March 1995.
TFL assists the Land Registry through internal data checking which
serves to correct some mis-registrations of sales.
Q3: Can you be more specific about how you do your forecasts?
History of all property sale prices in each neighbourhood from the
Land Registry is used as the basis for each individual forecast, in
combination with around 150 other data series, such as unemployment,
industrial output, bank rates, business activity, property sales,
office rents etc. This data-led forecasting process is automated,
so each forecast is subjected to the same rules and conditions, uninfluenced
by human interpretation.
At present, forecasts can only be offered for England & Wales.
To date, we have insufficient data history from Registers of Scotland
to provide a reliable basis for forecasts for Scottish property prices.
A downloadable paper on both the methods we use and their historical
accuracies can be found on http://www.tfl.biz/downloads.
Q4: Why should I believe your forecasts in preference to others’?
TFL is a totally independent forecaster of property prices. We neither
deal in property nor mortgages and mortgage advice. We therefore
have no vested interest in attempting to bias the market one way or
the other. We aim to make the best use of data that is available
to produce the best local forecasts possible with current technology.
TFL cannot offer absolute guarantees because we cannot guarantee
that the relationships we model to provide forecasts will be consistent
into the future. In so far as past data can be used to forecast,
TFL ensures that the best possible use is made of that data to obtain
a forecast. Clients such as H.M. Government’s Valuation
Office Agency and Thomson Local Directories use our services.
The methodology used by TFL to produce property prices for this site
was developed primarily by Dr Chris Satchwell, who is more well-known
in the USA for his work on pattern recognition in the field of stocks
and market trading. His book, "Pattern
recognition and trading decisions", has been described in
the USA as "destined
to be on the desktop of every serious technical trader".
Q5: So how accurate are they?
That depends on the strengths and consistencies of the relationships
underlying each individual forecast. They obviously vary, but we produce
statistics to describe that variation. TFL’s forecasts are offered
on the basis of sale values registered with the Land Registry, which
can reflect significant quarter-by-quarter changes. This year's
performance check has been completed, and results posted
to this site along with classifications for each forecast.
read
more about the historic accuracy of our forecasts
Q6: You say you forecast for three to five years. When most forecasts are for 5 years, why do some have a shorter forecast horizon?
In general, the forecasting process is stable, but occasionally, where the data history is short or volatile, the forecast goes unstable at later stages. If the earlier stage of forecast is reasonable, then we try to retain as much of the 'good' forecast as possible, and just remove the unstable periods. We will always retain well over 3 years-worth of forecast; where this is not possible, the entire series is removed from the list of forecasts.
Q7: Can you guarantee your forecasts?
No, of course not! The strengths and consistencies of
the relationships that our forecasts rely on vary greatly, so no individual
forecast can ever be guaranteed. However, TFL attempts to optimise
all forecasting technology to ensure that the most likely outcome,
on the basis of the data history, is offered. Unlike most forecasters,
TFL carries out an annual performance check, to provide our customers
with an indication as to how well prices would have been forecast
by TFL over the last 2 years, using current technology.
Neighbourhoods & forecasts
Q8: What is a neighbourhood?
A neighbourhood is defined for TFL's purposes
as a postcode sector. A postcode sector is the full postcode but dropping
the final 2 letters, encompassing around 2000 dwellings on average
although this varies considerably across the UK. Thus if your postcode
were say FR19 1AA (a non-existent code), then the postcode district
would be indicated by the first part of the postcode, FR19 (around
15-20,000 dwellings), while the sector would be
FR19 1.
Q9: The historic house price values you quote are different from those
given by the Land Registry. Why is this, when you say your forecasts
are based on Land Registry data?
There are two prime reasons for this.
- TFL tries to ensure all postcodes are to current Royal Mail standards
(although some earlier changes still have to be implemented), whereas
the Land Registry use the postcode registered by the vendor’s
agent at the time of sale. The prices registered with the Land Registry
on out-dated postcodes are allocated by TFL appropriately to the new
replacement postcode sectors, thus changing the historic values slightly.
- Because Land Registry values can be based on small sample sizes,
prices in a quarter can be significantly impacted by large- or small-valued
sales. Thus the data series can be highly erratic, which does not
help accurate forecasting. TFL therefore uses the value of property
of all different types in the same location to provide a broader perspective
on local average values, which serves to smooth out many of the more
extreme variations in the data. This in turn gives a better foundation
for accurate forecasting.
Q10: It looks like there is a current value but no data history for my neighbourhood, yet you have given a forecast. How?
Data for other property types and other postcode sectors in the district are all used to provide the likely history of property sale prices in this sector for this property type, on the basis of the latest given figure. Where there is not sufficient local data available, then forecasts will not be offered. In this case, sufficient local information has been found to enable a reasonable, logical forecast to be made.
Q11: My neighbourhood has some past data, but you haven’t made
a forecast of it. Why?
In some cases, where data history is short or erratic and surrounding
neighbourhoods don’t help particularly, there is insufficient
information in the data series to enable a forecast to be made. TFL
will not attempt to forecast anything where past experience cannot
provide a guide to the future – we believe this to be misleading
our customers. TFL specialises in highly localised forecasts; unlike
some competitors, we will not attempt to apply the wider area or regional
averages just to provide a forecast of some sort for our customers
which could very well be misleading in local terms.
Q12: The forecast for my neighbourhood shows a very wiggly line. Are
you saying that future house-prices will follow every kink in the line?
No, not really (although often it does get very close). A line such
as you describe indicates that, although average prices will be likely
to follow the general direction of the line, prices are likely to
vary considerably around that. You should also remember that all forecasts
will always become less accurate as timescales become longer.
Q13: London has been awarded the Olympics in
2012, but your forecasts of London house prices are showing little or
no response to this. Why not? Surely there is likely to
be some effect on prices?
Yes, there will almost certainly be some
effect on prices, but because our forecasts use only past experience
of localities and economics data, without forcing human prejudices
into the mix,it is as yet too soon for the success of the Olympic
bid to show through into the forecasts. By the first half of 2006,
the effects are likely to begin to show.
Operation of this website
Q14: As a business I wish to purchase forecasts by Company invoice,
not credit card. How can I do this?
This option is available through the “Subscription
Service” page.
For larger companies, please contact Technical Forecasts Ltd direct
to discuss pricing and usage.
Q15: I want to change my password to one of my choosing, that I can
remember easily. How can I do this?
Unfortunately, experience has shown that self-chosen passwords are
often easily guessed, and thus are insecure. Hence, to protect both
our customers and our information, we have taken the difficult decision
to provide passwords for our users which are not readily guessed.
Thus it is with regret that we have not provided any facility to
enable the changing of passwords, for security reasons. We hope our
customers will accept this necessity.
To simplify future access, we recommend that you save your password
notification email somewhere where it is easily accessible. When you
wish to log in, highlight and copy the password from that email (usually
Ctrl-c) and paste it into the Password box (usually Ctrl-v).
Q16: How do I get my third postcode report free,
when I have bought two?
Firstly, please note that this option only applies to those who have
obtained a username and password, in order to ensure that you are
the one who benefits from your free report.
Once you have logged into the site and bought two reports, the third
time you apply for a report you will receive it automatically, without
being charged.
Q17: Why does it take you so long to get
the new data up to your web-site?
In order to produce the best forecasts that we can, there is a huge
amount of data to be collected, apart from the Land Registry data
itself. Not only must all this be forecast, but once forecast,
data must be re-checked to ensure statistical validity and likelihood
of all forecasts. Those not reaching adequate standards are
discarded. This all takes time.
Only once all these processes have been
completed to our satisfaction are we ready to make them available
for public use.
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