There are many property indexes out there and depending on which on you read, the house prices can rise and dip at the same time! So, how can you make sense of it all, so you can sell or buy at the right time and get the most for your money.
So each month a list of companies produce their own house price listings. Some of them agree with each other and some of them don’t, so I thought I would give you a quick summary to each of them, to give you a better idea of how they work. This can help whether you are buying or selling your own home or you have an interest in property investment.
The main companies involved are as follows:
They are now part of the Lloyds Banking Group and one of the UK’s biggest mortgage lenders. It covers the whole of the UK and is based on agreed mortgages by Halifax. It has been going for 30 years, so has come clout, however with seasonal fluctuations and their historical Northern skew, it may not be a completely accurate national average.
This is a Government department responsible for recording all details of property in England and Wales. It counts both cash sales as well as mortgages. It is revised each month so is very accurate, however it does not take into consideration new builds as it only lists properties which have been sold more than once since 1995.
This is the UKs biggest building society and one of the biggest mortgage lenders. It works in a similar way to Halifax, however it changed its methodology in 1993 to cope with lower numbers, so it believes it is more accurate than the Halifax for the average house price. It doesn’t include buy-to-let and the top and bottom of the market. It also does have an historical Southern bias, so using the two together might give you a good idea!
They are a website advertising properties being sold by 90% of the UKs estate agents. It has been going since 2001. It shows the average asking price for property put on the market each month.
Rightmove does admit, “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 actual prices fetched for the properties could be wildly different.
Office for National Statistics
They are the Government’s official data collectors. It is collected from a sample of completed property sales provided by mortgage lenders which is about 70% of the market. It is not seasonally adjusted or skewed by locality or house size bias. They say it is “one of the main house price indices used by central and local government to support decision making in the UK”.
LSL Property Services
A company called Acadametrics which is a consultancy which specialises in risk assessment of property and mortgages compiles a list on behalf of LSL who are a company that owns estate agents and surveyor firms. It is based on data from the Land Registry, however Acadametrics adjusts them to give an average price including new builds and much older homes so it should be more accurate.
Royal Institution of Chartered Surveyors
They are the trade body for surveyors and it is compiled by surveyors who give their opinion on how the property market is behaving in their area. It has been going since 1978 and is altered by long term averages from the Land Registry. It’s useful as the figures show how many properties are on sale and how many possible buyers are signing up, so you can get an idea of how buoyant the market is at any one time.
If you would like to know more in-depth information, then have a look at the article from the Guardian which goes through it in more detail: http://www.theguardian.com/money/2012/may/03/house-prices-different-indices