We asked the question, Are the British obsessed about house buying and house prices? a couple of months ago.
The British are obsessed about house prices because most of their wealth outside of pensions is invested in property.
Here is a summarized comparison of the different house price indices in the United Kingdom,
The Halifax Index uses the following variables:
location (region)
property type
number of habitable rooms
number of bathrooms
number of separate toilets
number of garages
number of garage spaces
presence of a garden
number of acres
central heating
freehold (or not)
road charge liability
age of property
The Nationwide Index uses the following variables:
location (region)
property type
number of bedrooms
ACORN area classification (ACORN is a consumer classification that segments the UK population by analysing demographic data, social factors, population and consumer behaviour)
new or old property
The UK House Price Index uses the following variables:
location (local authority)
property type
number of rooms
floor area
ACORN area classification (ACORN is a consumer classification that segments the UK population by analysing demographic data, social factors, population and consumer behaviour)
new or old property
Rightmove uses an approach which calculates the average price for each property type in each postcode.
LSL Acadata calculates the average price for each property type by using Unitary/Local Authority Area rather than postcode.
Which index is most accurate?
That is hard to answer but based on geographical coverage, number of transactions and methodology it would appear the UK House Price Index should have the highest accuracy of tracking house prices.
Rightmove is based on asking prices and as such is not that meaningful because properties can be advertised at any price, doesn’t mean they will be sold at that price.
The movement of the indices generally track each other but the average price difference does vary.
Here are some graphs,
To conclude, the trends are the same over the long term for each of the indices and generally track market sentiment closely. For actual prices, the UK House Price index jointly produced by HM Land Registry, Land and Property Services Northern Ireland, Office for National Statistics and Registers of Scotland is probably the most accurate.