House price indexes – which is the best?

Author: Donna Houguez, Market Analyst at Quick Move Now

Want to sell your house and getting fed up of hearing conflicting reports from different monthly house price indexes? So is Quick Move Now! Here is a quick overview of the four main index providers, along with some handy notes for how to interpret their data. We also compare their reporting of house prices during 2012…

Nationwide House Price Index

Calculation
The percentage change in average price agreed on a property being bought using a Nationwide mortgage at the final approvals stage across the whole of the UK.

Pros
• Longest running house price index with data going back to 1952

Cons
• Relatively small sample size
• Only takes into account mortgage purchases

What they said happened with house prices in 2012
-1.1%

Halifax House Price Index

Calculation
The percentage change in the average price agreed on a property being bought using a Halifax mortgage at the approvals stage across the whole of the UK.

Pros
• Three month rolling average to iron out short-term fluctuations

Cons
• Relatively small sample size
• Only takes into account mortgage purchases

What they said happened with house prices in 2012
-1%

Author’s note
I tend to look at the Nationwide and Halifax house price indexes together and they are usually fairly similar, particularly over time, suggesting that their mix-adjusting removes any regional bias. Despite the small sample size and the fact that they discount cash buyers, they give a good overview of what’s happening in the mortgage market.

Land Registry House Price Index

Calculated
Percentage change in purchase price of residential properties bought using a mortgage or cash in England and Wales.

Pros
• Based on final, actual selling price
• Based on repeat sales
• Includes cash buyers
• Revised continually so very accurate

Cons
• Time lag between houses being sold and the transaction being registered
• Does not include new builds or properties not previously sold since 1995

Author’s note
This is the index I trust the most, even though it is frustrating waiting for it to be published. It is certainly my ‘go-to’ when looking at historical trends.

What they said happened to house prices in 2012
+1%

Rightmove House Price Index

Calculated
The percentage change in residential property asking prices in England and Wales from the asking prices of homes newly listed on the website.

Pros
•90% of properties for sale are listed on the Rightmove portal so very large sample (120,000 properties a month)

Cons
• Asking prices often bear no relation to actual selling price

Author’s note
I look at this as the first statistic in the buying process and it can be a really useful barometer for judging confidence in the market. If it suddenly shoots up or down, it alerts you to a possible change in mood. However, and it is a big however, a lot happens between asking price and final price, sellers are well-known for their misplaced confidence in the value of their property and the gap between asking price and selling price is growing ever wider.

What they said happened to house prices in 2012
+2.4%

Conclusion
Looking at the change in house prices that all of these indexes report for the year of 2012, Rightmove is over-enthusiastic, Nationwide and Halifax are on the negative side and the Land Registry in the middle – exactly what you’d expect taking into account how they’re all calculated.

So, who’s right? Well, they all are!

As long as you know the basic differences between them, you can look at the picture as a whole (for both monthly and annual analysis) and that will give you a good feel for what’s happening. Using that methodology – you can see that in 2012, house prices were largely unchanged.

This content was written by Quick Move Now
Published on 12th April 2013
Last updated on 20th April 2017

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