The Inside Edge
Well, here at the Big Property List we seem to be reporting on house prices going up and down every other week so we thought we would take a look into the house pricing process and what it all means. How are these figures generated and do they give an accurate picture of what is happening in the UK with regards to house prices. If you are looking to move home in the near future, it pays to check out the latest properties in your area and get a good idea of what is going on.
The Land Registry has been recording property prices since April 2000 and records all completed property sales in England and Wales. Their data however goes back as far as January 1995.
Using a process called Repeat Sales Regression, the Land Registry measures the changes in property prices over time. This means it will only measure the change in price of properties that have been sold in the past. This gives a fair and proper comparison.
Most property sales are included in the Land Registry survey except the sale of commercial properties and ex-council properties sold at a discounted price. Any property transfers or repossessions following a divorce are also excluded to avoid misleading the statistics.
A report is published each month on the Land Registry website and a quarterly survey is also published on the BBC News website.
An average price is reached by adding up all the transactions in any given month and then dividing the total number of sales. Almost all residential sales are included and recorded providing a really unique picture of national and also local property prices. The Land Registry can actually give a fairly accurate insight into prices at postcode level.
Government Price Survey
The Government also produces its own monthly house price index. This is issued by the Department of Communities and Local Government (DCLG). The survey covers the whole of the UK and is based on the data received from the Council of Mortgage Lenders.
As a result of data being supplied by the Council of Mortgage Lenders and including the number of mortgage-based sales, cash sales are not included.
Nationwide and Halifax
Both surveys provided by the Nationwide and Halifax, cover the whole of the UK and are based on a sample of their loans each month.
Property prices measured in these surveys are those which are agreed with a mortgage is approved and not later when the sale is at completion stage.
Just like the DCLG survey, the Nationwide and Halifax surveys are based on mortgage-based property sales so no cash sales are recorded.
Royal Institution of Chartered Surveyors (RICS)
The RICS survey reports on confidence in the property market and not the latest changes in property prices. A survey is conducted of 250 estate agents in the UK (all members of RICS). They are asked whether they feel the prices in their areas of business have been rising or falling over the previous 3 months.
Whilst this might not appear to be a reliable way to measure the property market, it is actually quite useful in reflecting changes and how professionals feel the market is developing over a given time period.
As well as house prices, respondents are also asked how they feel about a number of other subjects such as the number of property buyers falling or rising.
The data provided by these house surveys is very useful and helps those in the industry determine the latest trends and property prices and those looking for a new home to strike whilst the iron is hot or hold back until situations improve.