by Mark Johnston
It seems that as a nation we are all curious when it comes to property. Whether looking for a new home, wanting to upgrade or downsize or to just be plain nosey!
House price indices (HPIs) have been produced in theUKsince around 1973, initially by mortgage providers and more recently by government bodies and property market websites.
There are now at least 7 well publicised house prices indices for us to check out prices on. Every other day seems to bring a fresh house price survey, but they often appear to move in different directions.
In general they try to measure the appreciation or deprecation of a given group of properties, usually across the country and over a set period of time. However, each index does have its limitations.
A house price index is merely an indicator of wider market conditions. Professor Gwilym Pryce, a housing expert at the University of Glasgow, says “people tend to look at headline figures from the house price indices and assume they apply to their type of property and their area, but of course this might not be the case”.
Whether buying or selling a property or working in the property industry it helps to know exactly who is producing each index, what data they use and what the headline figure actually reflects. Sometimes these findings agree and sometimes they conflict.
This index uses the land registry’s own data, which consists of the transaction records of all property sales inEnglandandWales. It only measures the change in the price of properties that have been sold to ensure a proper comparison. It is seen as the most accurate index available as includes figures at national, regional, county andLondonbough level, therefore it can provide an accurate picture of prices down to postcode level, and the figures are published monthly. However it does not include sales from repossessions or auctions.
This is produced by the Department for Communities and Local Government (DCLG) and it covers the whole of theUKand is based on data supplied by the Council of Mortgage Lenders (CML). This covers a large sample of completed sales which have gone through with a mortgage, this does mean however that cash sales are not included. The downside to this index is the data is complied from only a few large lenders
ROYAL INSTITUTION OF CHARTED SURVEYORS (RICS):
This data is collected by monthly surveys to surveyors. The questions cover changes in prices, sales and also what they expect to happen over the next year. These figures show how many properties are on sale and how many potential buyers are signing up, but the other data is questionable as it is based on sentiment.
The above are the indexes produced by large institutions or government and tend to be the first port of call for those in the property industry, although anyone has access to these indexes.
Story link - House Price Index Part One
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