The British obsession with house prices is well known. Just take a look at the EU Referendum campaign in which both sides claimed that if the other lot won, house prices would fall. They knew that it was a powerful message, irrespective of which side may have been right. People care about house prices.
For many of us, when we see a ‘for sale’ sign appear on our street, the first reaction is not to wonder why the neighbours are moving, or what sort of people might buy the property. No, most of us head to Zoopla or Rightmove to see what the asking price is, so that we can measure it up against our own home. We can’t help it.
This house price obsession is why house price indices are such big business in the UK. Whenever a new house price index is published, it gets a lot of coverage in the press, from the national newspapers and industry trade titles alike. While I’m a keen participant in the house price debate, I wonder sometimes how useful so many indices are.
Last month has seen the launch of a brand new index from the government, the snappily named UK House Price Index (UK HPI for short).
The UK HPI brings together data from the Land Registry, Office for National Statistics (ONS), Registers of Scotland, Land & Property Services (Northern Ireland) and the Valuations Office Agency.
It’s been a long time coming – back in 2010 the National Statistician recommended that “a single definitive house price index and accompanying statistics should be produced by the official statistics producer community”. It’s taken until now to get these disparate data sources together to produce a single house price index.
Previously the Land Registry and ONS released separate indices, which could present rather contradictory data. The Land Registry index generally had a pretty good reputation within the industry for being comprehensive and accurate. The problem was that it was so slow, reporting on figures a couple of months out of date.
It’s worth noting though that this problem hasn’t been addressed with the new UK HPI, with its first set of results covering transactions from April.
Halifax and Nationwide offer a more up-to-date price report with their own monthly indices, but they are less comprehensive, relying as they do on their own lending data rather than data for the nation as a whole. As a result, Nationwide reckons the current national average property price is £204,968, while Halifax claims it is £213,472, more than 4% higher. The new UK HPI reckons house prices have grown 8.2% over the last 12 months, and now sit at an average of £209,000 – slap bang in the middle.
And then there are all of the other house price indices we see on a regular basis, such as those from LSL and Hometrack, while Rightmove publishes an asking price index every month. Then there’s the Royal Institution of Chartered Surveyors that has its Residential Market Survey which reports on price activity and predicts future movement, without putting firm figures on them.
All of this creates a lot of noise about house prices, ensuring that conversations about whether they are going up, down or sideways remain in the national consciousness. But is that noise actually helpful?
The point of a house price index, surely, is to keep us informed about what’s happening to the value of our homes. But the reality is that there are so many of them, offering such varied – and occasionally contradictory – interpretations of what’s going on that some buyers and sellers are none the wiser.
The UK HPI has had a decent start. Lots of us in the industry were pleased by just how comprehensive it was, though the familiar grumbles about it being a month behind Halifax and Nationwide persist. I don’t think many of us would be too upset if the UK HPI succeeds in becoming the definitive house price index, with some of the other indices gradually disappearing from view.
Whatever would we talk about then?