The National Statistician has this week called on the Government to introduce a single House Price Index for the UK. There are currently two sets of official figures - one compiled by The Land Registry and the other by the Department of Communities and Local Government – and there are concerns that this can confuse the public.
Jill Matheson, the Government's chief adviser on official statistics, says the two providers of official house price indices should look into ways of working together to produce one headline figure and to also look into the feasibility of producing a joint statistical report. It’s proposed that the single headline figure be accompanied by a report that gives context to the statistics and highlights their relation to other non-official sources and the wider housing market indicators.
This sounds sensible given the confusion that often surrounds the figures generated each month by a host of different house price indices and surveys.
The key to understanding these figures is to firstly understand exactly what the different indices measure. For example the Land Registry House Price Index measures completed transactions so it gives accurate numbers, but on sales that could have been agreed several months prior. On the other hand, the big indices from mortgage lenders Halifax and Nationwide relate to their own mortgage approvals - these give a more up to date snapshot, but will include some deals that never actually go ahead. This BBC article has a good summary of the difference between some of the main indices.
Any work to bring a little more clarity and context to house price indices is to be welcomed. Ultimately, all the figures help to build a general picture of the housing market and although this move won’t eradicate the barrage of data, it might hopefully help to give a more balanced picture to people making decisions about buying or selling a home.