Every month various organisations publish home value indices, every based mostly on a distinct set of knowledge. Typically the findings agree, generally they battle. Once we report on these figures we clarify what they’re displaying, however we thought it will be helpful to present a complete information to the principle indices.
Whether or not you’re shopping for or promoting a property, working within the property trade, or simply within the ups and downs of the housing market, it helps to know precisely who’s producing every index, what information they use, and what the headline figures truly mirror.
Over on the home costs weblog you may inform us what you concentrate on the completely different indices.
Click on under to see the completely different indices:
Halifax
Land Registry
LSL Property Providers/Acadametrics
Nationwide
Workplace for Nationwide Statistics
Rightmove
Royal Establishment of Chartered Surveyors
Who compiles it? Halifax, now a part of Lloyds Banking Group, and one of many UK’s greatest mortgage lenders.
What does it present? The common value agreed on a property being purchased utilizing a Halifax mortgage, and the share change within the value over the month and 12 months. A quarterly survey exhibits regional information.
What space does it cowl? The entire of the UK.
What time interval does it cowl? A full calendar month: the first till the final day of the month.
What’s it based mostly on? Mortgages accepted by Halifax.
How lengthy has it been going? Halifax began publishing information in January 1983, however the index in its present type started in April 1984.
Is it seasonally adjusted? Sure.
What else is completed to the uncooked information? Halifax “standardises” the figures in order that as a substitute of evaluating the costs of 1 set of homes one month with one other set of homes the following, it tracks the worth of a “typical house”. It creates this by giving values to sure attributes of the properties being purchased – together with the variety of rooms, how a lot central heating it has and whether or not there’s a backyard – and utilizing these to calculate the worth. That is known as the “hedonic method”. For its annual value change it makes use of a mean of the final three months’ costs and compares this with the typical for a similar interval of the earlier 12 months. Full particulars are right here (A4 doc).
Why ought to I belief it? Halifax is without doubt one of the UK’s largest lenders and has been working the survey in the identical manner for nearly 30 years.
Why ought to I be sceptical? Though Halifax makes an attempt to iron out anomalies, critics say its information may be skewed in months when there are low numbers of transactions, and that the financial institution’s historic northern bias means its typical home could not mirror the typical UK home.
Who compiles it? The Land Registry is the federal government division accountable for registering and recording particulars of land and property possession in England and Wales. It employs Calnea Analytics to really compile the info.
What does it present? The common asking value of properties purchased up to now month – these are the costs on completion and embody money purchases in addition to these funded with a mortgage. It additionally reviews annual and month-to-month value modifications.
What space does it cowl? England and Wales.
What time interval does it cowl? Calendar month.
What’s it based mostly on? The costs paid in residential gross sales in England and Wales accomplished throughout the month and reported to the Land Registry – about 35% are normally reported by the month finish.
How lengthy has it been going? Since 2005, though information going again to January 1995 has been added.
Is it seasonally adjusted? Sure.
What else is completed to the uncooked information? Any property that hasn’t been offered not less than twice since 1995 is faraway from the pattern – Land Registry says it has barely greater than 6m identifiable matched pairs of gross sales – and the index is predicated on the repeat gross sales regression technique. The common value as at April 2000 is taken because the baseline value, and development measured in every interval is utilized to it to provide the present common value. Full particulars are right here (pdf).
Why ought to I belief it? Land Registry says its index is “the most accurate independent house price index available. Using our data set of completed sales, it is the only index based on repeat sales.” It’s the just one based mostly on all gross sales, mortgaged and in any other case, and on the ultimate value achieved for the property.
Why ought to I be sceptical? Like among the others it’s seasonally adjusted. It would not mirror the costs paid for new-build properties or people who have remained in the identical arms for an extended interval, which implies fewer than the 35% of gross sales reported are literally used. The index is revised every month due to the time lag between completions and registrations, which implies it’s finally very sturdy, but in addition means you’re coping with a determine which is able to change barely.
Who compiles it? Acadametrics, a consultancy which specialises within the evaluation of threat in property and mortgage portfolios, for LSL, a property firm which owns property company companies and surveyors.
What does it present? The common value of a property purchased and registered with the Land Registry over the previous month. It exhibits month-to-month and annual modifications and the variety of gross sales.
What space does it cowl? England and Wales. A separate index for Scotland is predicated on the Registers of Scotland.
What time interval does it cowl? Calendar month.
What’s it based mostly on? The Land Registry’s home value information.
How lengthy has it been going? Since September 2003 (initially it was the FT Home value index), however information going again to 1995 has been added and it has been back-cast to 1989.
Is it seasonally adjusted? Sure.
What else is completed to the uncooked information? Land Registry gathers all of its information for gross sales reported throughout a month, together with gross sales accomplished in earlier months, and calculates common costs. These are given to Acadametrics, which combine adjusts them to supply a mean value which is not skewed by modifications within the forms of properties offered month-on-month. As a result of solely round a 3rd of gross sales accomplished in a month are reported by the top of the month, an “index of indices” mannequin is used to calculate what the determine will probably be when all gross sales are in.
Why ought to I belief it? It’s based mostly on a giant information set and refers to accomplished gross sales financed with mortgages and money, together with new-build properties in addition to older properties. The “index of indices” calculation permits it to be extra updated than the Land Registry.
Why ought to I be sceptical? As soon as all gross sales are in it’s topic to alter, and every month figures from earlier months are up to date.
Who compiles it? Nationwide, the UK’s largest constructing society and one of many greatest mortgage lenders.
What does it present? The common value agreed on a property purchased utilizing a Nationwide mortgage, and the share change within the value over the month and 12 months. A quarterly survey exhibits regional information.
What space does it cowl? The entire of the UK.
What time interval does it cowl? Ostensibly a calendar month, however it’s at all times revealed earlier than the top of the month and Nationwide won’t say which date it runs to, claiming the knowledge is commercially delicate.
What’s it based mostly on? Mortgages which are on the approvals stage with Nationwide, which is after the valuation has been carried out. Nationwide says its share of the gross home buy market has been about 10% in recent times.
How lengthy has it been going? The society has quarterly figures courting again to 1952 and month-to-month figures courting again to 1991, though it modified its methodology in 1993.
Is it seasonally adjusted? Sure.
What else is completed to the uncooked information? A number of forms of property are eliminated, together with buy-to-let and right-to-buy properties, plus very small or very giant properties (there are specified limits for every sort of property). The society then “mix-adjusts” the costs to provide you with the worth of a “typical house”. The system appears at elements resembling location and variety of bedrooms, and relates them to the worth for which the home was offered. From this the mannequin can estimate how a lot on common a home would value given a set of values for these traits. Full particulars are right here (pdf).
Why ought to I belief it? Nationwide says its index can address low numbers of transactions: “Although it remains similar to the Halifax method we substantially updated our system in 1993 following the publication of the 1991 census data. These improvements mean that our system is more robust to lower sample sizes because it better identifies and tracks our representative house price.”
Why ought to I be sceptical? Though the standard house is used, as with Halifax critics say its information may be skewed in months when there are low numbers of transactions and by the society’s southern bias.
Who compiles it? Beforehand the communities and native authorities division, now the Workplace for Nationwide Statistics – the federal government’s official information collectors.
What does it present? The common value on completion for a property within the UK, and annual and month-to-month modifications. Information is damaged down by area, sort of property and kind of purchaser.
What space does it cowl? The entire of the UK.
What time interval does it cowl? A full calendar month, however there’s a lag – March’s figures are revealed in Might.
What’s it based mostly on? Information from a pattern of accomplished property gross sales offered by mortgage lenders, representing about 65%-70% of properties purchased with mortgages. Throughout 2007, when there have been on common about 85,000 loans a month for home buy within the UK, roughly 50,000 data a month had been equipped by about 60 lenders. Within the six months to June 2011 there have been a mean of 37,000 loans a month for home buy, and 26 lenders equipped data on about 21,600 gross sales.
How lengthy has it been going? Since February 2002.
Is it seasonally adjusted? The index consists of each seasonally adjusted figures and untouched figures on the nationwide stage.
What else is completed to the uncooked information? It’s “mix-adjusted” so it is not skewed if a number of flats within the south-east are offered one month, then a number of four-bed properties in Scotland the following. Totally different traits of every property are given values/weights, and these feed right into a mannequin of a mean residence. The values are based mostly on the transactions carried out throughout the earlier three years. For instance, the 2012 weights are based mostly on transaction numbers from 2009-2010.
Why ought to I belief it? As a result of it’s based mostly on information from numerous mortgage lenders and since, in contrast to many of the others, it is not seasonally adjusted. The ONS says it’s “one of the main house price indices used by central and local government to support decision making in the UK”.
Why ought to I be sceptical? When the DCLG nonetheless managed the index it stated it was “influenced by house price growth rates in the higher priced areas (which are currently in the south) where house prices – and therefore total expenditure on house buying – is highest. Similarly, regional rates of change in house prices determined by the DCLG Index are more influenced by the market for the higher priced properties (ie, the demand for detached houses).”
Who compiles it? Rightmove, a web site which advertises properties being offered by 90% of UK property brokers.
What does it present? The common asking value for properties put available on the market over the previous month, and the share change in that value over the month and over the 12 months.
What space does it cowl? England and Wales.
What time interval does it cowl? The month as much as the second Sunday of each month – this can be 4 or 5 weeks relying on how the calendar falls. March’s figures will probably be measured on the second Sunday in March.
What’s it based mostly on? The asking costs of properties newly listed on the web site – in a typical reporting interval Rightmove says that can normally be 30,000-40,000 properties per week, or round 120,000 in whole.
How lengthy has it been going? Data started in August 2001; reporting started in August 2002.
Is it seasonally adjusted? No.
What else is completed to the uncooked information? Properties with asking costs which are three commonplace deviations above or under the imply inside every area are faraway from the calculations. This may be a number of thousand properties. The information is mix-adjusted so it is not skewed if, for instance, in a single month many extra flats are offered in comparison with homes. That worth is then used within the calculation of the typical nationwide value.
Why ought to I belief it? Rightmove says of its survey: “It is produced from factual data of actual prices of properties currently on the market.” The pattern consists of “circa 90% of the market – the largest and most up-to-date monthly sample of any house price indicator in the UK”.
Why ought to I be sceptical? As Rightmove admits: “It reflects asking prices when properties first come on to the market, rather than those recorded by lenders during the mortgage application process or final sales prices reported to the Land Registry.” The precise costs fetched for the properties may very well be wildly completely different.
Who compiles it? Rics, the commerce physique for surveyors.
What does it present? How surveyors assume the property market is behaving of their space.
What time interval does it cowl? A calendar month. Surveys are despatched within the second week of the month and acquired by the top of the month.
What’s it based mostly on? Responses to a month-to-month survey of 450-500 surveyors (normally 250-300 reply). They’re requested 10 questions protecting modifications in costs, gross sales and curiosity over the earlier three months and what they count on to occur over the following 12 months. They’re additionally requested for agency figures on what number of properties have been offered and what number of are on the market.
What space does it cowl? England and Wales. Data is collected throughout 10 geographical areas.
How lengthy has it been going? Since January 1978.
Is it seasonally adjusted? Sure.
What else is completed to the uncooked information? It’s regionally weighted utilizing long-term averages based mostly on Land Registry figures. If an space represents 10% of gross sales, responses from that space will probably be weighted to symbolize 10% of Rics’ general determine. Numbers are crunched to provide a internet steadiness, so as a substitute of telling us what number of surveyors assume costs will go up and what number of assume they’ll go down, the index subtracts the proportion forecasting a fall from the proportion forecasting an increase – so if 10% assume costs will rise however 20% assume they’ll fall, it says -10% assume there will probably be a fall. This doesn’t imply a ten% fall is being predicted.
Why ought to I belief it? Figures displaying what number of properties are on sale and what number of would-be consumers are signing up can provide you a good suggestion of what’s taking place within the housing market.
Why ought to I be sceptical? As a result of the remainder of it’s based mostly on sentiment.
