Around a quarter of landlords are feeling increasingly positive about the profitability of their property portfolios, according to a recent sentiment survey from buy to let lender Paragon Mortgages.
A second sentiment survey, this time from the Royal Institution of Chartered Surveyors (RICS), has conversely concluded that the property market is currently ‘flat’.
Sentiment surveys are based solely on opinion. A group of people in a similar situation will be asked the same questions, and the responses collated.
In addition to the research from Paragon and RICS, there are a number of other sentiment surveys which are often published under the headings of ‘opinions’ or ‘confidence indicators’. The reports are regularly compiled around consumer or business-owners’ responses to economic circumstances.
The Paragon Mortgages report – available for download here - fails to mention how many landlords participated in the survey, which makes it hard to gauge the validity of its claims.
RICS, meanwhile, is transparent about who has contributed the opinions in their survey.
The Reserve Bank of Australia has released a survey of sentiment surveys, which concludes that this style of research is really no more than a PR vehicle for the businesses and institutions which commission the surveys.
John Simon and Ivan Roberts who organised the Reserve Bank of Australia’s survey suggest that a review of past economic data is going to produce the same results as the majority of sentiment surveys.
“Business and consumer sentiment receive widespread media coverage and are closely watched by market economists despite their limited success as leading indicators. There is little evidence that the surveys tell us anything we didn’t already know,” said the authors.
“Thus, there is reason to suspect that surveyed respondents’ forecasts offer little more information about the future path of the economy than a weighted average of lagged economic variables.”
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