House price surveys explained
- 31 December 2010
- From the section Business
More than 10 house price surveys are published each month, but often they appear to move in different directions.
BBC News asks how the main surveys work and which ones should you trust?
The Land Registry, which records all completed property sales in England & Wales, has been publishing property prices since April 2000, though the data now goes back to January 1995.
Most sales are included, except for commercial properties and a small number of residential sales, such as those of council houses and council flats sold at a discount.
Repossessions and property transfers following a divorce are also excluded to avoid skewing the sample.
The Registry's price index is calculated by measuring only the change in the price of properties that have been sold before, to ensure a proper comparison.
A similar survey is produced in Scotland by the Registers of Scotland.
The government has its own monthly house price index, issued by the Department for Communities and Local Government (DCLG).
It covers the whole of the UK and 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, which means cash sales are not included.
The DCLG says that in the first half of 2010 there were an average of 42,000 loans per month to house buyers, and the sample amounted to about 24,000 sales each month, involving 32 lenders.
Thus the DCLG survey has been covering about 60% of UK sales involving a mortgage.
It appears two months after the month in question.
Nationwide and Halifax
These are the two best known and longest running monthly snapshots of the UK property market, provided by Britain's two biggest mortgage lenders, the Nationwide and Halifax.
Both cover the UK, but are based on a sample of each lender's own loans each month.
The prices measured are those agreed at the point when the mortgage is approved, not at the later point when the sale is completed.
The Nationwide and Halifax surveys use identical statistical methods.
But because they use different samples the figures sometimes diverge, in terms of both the monthly price changes and annual trends.
Like the DCLG survey, the surveys are based only on property sales financed by mortgage lending, ignoring sales which are sold for cash.
Royal Institution of Chartered Surveyors (Rics)
This monthly survey reflects opinion of about 250 estate agents who are members of Rics.
They are asked if prices have been steady, falling, or rising in their own areas in the preceding three months.
On the face of it this should be a very subjective and inaccurate way of measuring property price changes.
In fact the Rics survey has a good track record of having its finger on the pulse of the market and is often the first to detect significant changes.
Respondents are also quizzed on a host of other important related issues, such as whether the number of buyers and sellers are rising or falling.
Hometrack and Rightmove
Both of these internet property industry businesses produce their own house price surveys each month.
Data is collected by Hometrack from estate agents in every postcode district of England and Wales.
The estate agents are asked to report the "achievable selling price" for each of four standard property types in their area.
Rightmove's survey operates in a completely different way.
It is based on the prices that estate agents are asking for the properties they are advertising on the Rightmove website.
The firm says its website now displays 90% of all homes for sale in the UK although its monthly survey covers just England and Wales.
It obviously does not reflect the prices at which properties actually sell.