House prices: what do the different indices show?

House prices seem to fluctuate wildly from index to index, so which should you trust? Photograph: Christopher Furlong/Getty Images

 

Every month a number of organisations publish house price indices, each based on a different set of data. Sometimes the findings agree, sometimes they conflict. When we report on these figures we explain what they are showing, but we thought it would be useful to give a comprehensive guide to the main indices.
Whether you are buying or selling a property, working in the property industry, or just interested in the ups and downs of the housing market, it helps to know exactly who is producing each index, what data they use, and what the headline figures actually reflect.

Click below to see the different indices:
Halifax
Hometrack
Land Registry
LSL Property Services/Acadametrics
Nationwide
Office for National Statistics
Rightmove
Royal Institution of Chartered Surveyors

Halifax

Who compiles it? Halifax, now part of Lloyds Banking Group, and one of the UK's biggest mortgage lenders.
What does it show? The average price agreed on a property being bought using a Halifax mortgage, and the percentage change in the price over the month and year. A quarterly survey shows regional data.
What area does it cover? The whole of the UK.
What time period does it cover? A full calendar month: the 1st until the last day of the month.
What is it based on? Mortgages approved by Halifax.
How long has it been going? Halifax started publishing data in January 1983, but the index in its current form began in April 1984.
Is it seasonally adjusted? Yes.
What else is done to the raw data? Halifax "standardises" the figures so that instead of comparing the prices of one set of houses one month with another set of houses the next, it tracks the price of a "typical house". It creates this by giving values to certain attributes of the properties being bought – including the number of rooms, how much central heating it has and whether there is a garden – and using these to calculate the price. This is called the "hedonic method". For its annual price change it uses an average of the last three months' prices and compares this with the average for the same period of the previous year. Full details are here (A4 document).
Why should I trust it? Halifax is one of the UK's largest lenders and has been running the survey in the same way for almost 30 years.
Why should I be sceptical? Although Halifax attempts to iron out anomalies, critics say its data can be skewed in months when there are low numbers of transactions, and that the bank's historical northern bias means its typical house may not reflect the average UK house.
Full article can be found by followinf the link below
http://www.theguardian.com/money/2012/may/03/house-prices-different-indices