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House prices: who can you trust?

Edward Freeman outlines the differences between house price estimates

Seemingly every day we are bombarded with the “latest statistics” showing we are heading for another boom/crash (delete where appropriate). With so many different indices based on different methods, and coming up with different answers how are you supposed to know what’s really going on? Each of the major indices have different ways of calculating their estimates, which explains why they sometimes contradict each other. Some are based on mortgage lending (Nationwide and Halifax) whereas others are just “expert” opinions (RICS). Moreover, the most comprehensive and reliable indices (Land Registry and ONS) are the least media friendly because they come out much later than the rest, and therefore don’t get as much attention as the others.

Land Registry – covers England and Wales and is the official record of all sales. The most comprehensive index as covers nearly all residential properties that are sold (with a few exceptions such as repossessions and council homes sold at a discount). This tends to be less up to date than other indices because it is takes in more data. Published at the end of the following month

Nationwide – covers all of the UK. Based on mortgages sold by the company. Prices come from their valuation at the point when the mortgage is approved. Published at the end of the month for which it is reporting. It’s important to remember that many transactions each month do not require a mortgage – ie when someone is downsizing. This does reduce the credibility of both Nationwide and Halifax’s estimates.

Halifax – covers all of the UK. As part of Lloyds Banking Group, the largest mortgage lender in Britain, this index assesses data from 20% of the UK mortgage market. Based on mortgages sold by the company. Prices come from their valuation at the point when the mortgage is approved. Published in the first week of the following month

Royal Institute for Chartered Sureyors – Purely opinion, not based on statistics. 250 estate agents from around the country are asked how they feel prices are doing in their area. Despite this, it tends to produce results similar to other major indices. Published second week of following month

Rightmove – The property listings website compiles average prices from homes added to their site over the last month. However, remember the listing price is almost always higher than the price achieved so it may be an over estimate. They claim to have 90% of all homes on the market in the UK listed on their site but their monthly report only covers England and Wales. Published in the last week of the month about which it is reporting

HomeTrack  – The property analysis site. 3,500 estate agents from all 2,200 post codes in England and Wales are asked whether asking prices are up or down over the last month. Published in the last week of the month about which it is reporting

Office for National Statisitics – The Government’s official house price report. Based on data provided by the Council of Mortgage Lenders and creates an average from about 60% of the UK sales involving a mortgage. Published about six weeks after month is complete

To make life easier we’re launching House Price Watch – a monthly summary of all the major indices so you need only to come to use to find a concise and reliable summary of what’s happening in the housing market. It will be your one-stop-shop for all your house price news! Sign up to our newsletter to keep up with when the first one will be published

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