Reviewing Residential Property Price Indices in the UK

Reviewing Residential Property Price Indices in the UK Emily Carless National Statistician’s Office, UK Statistics Authority

Overview • Residential Property Price Indices in the UK • Users and uses of the statistics • Framework for a definitive official house price index • Recommendations of the review • Next steps

Official indices (1) • Department for Communities and Local Government – – Sample of mortgages Hedonic regression/ mix adjusted UK Monthly since 2002 / Quarter from 1968

Official indices (2) • Land Registry – – Registered sales Repeat Sales Regression England Wales Back cast to 1995 • Registers of Scotland – – Registered sales Simple average Scotland Published since 2003 (monthly, quarterly and 4 week)

Non-official statistics • • • Halifax (mortgage lender) Nationwide (mortgage lender) Rightmove (website advertising property) LSL/Acadametrics Hometrack/ Royal Institute of Chartered Surveyors

Why review? • “concern as to whether the public and policy makers have access to the most accurate, up to date and complete data in the most helpful form when they make decisions about the housing market” • Review by the UK National Statistician as chief statistical advisor to Government and head of the Government Statistical Service

Different stages Different coverage

Different estimates

Timeliness

Users and uses • Online consultation – – – What type of user represent? Which sources used? What use house prices for? What ‘domains’ they use? Satisfaction with official statistics • Over 200 responses

User group and source Percentage of each user group using each source of house price statistics

Uses made of House Price Statistics Percentage of users describing their use of house price statistics as in each category

Groupings/ domains Percentage of respondents using each grouping of house price indices

Framework for a definitive house price index 1. 2. 3. 4. 5. 6. 7. 8. 9. Represent the prevailing market price of residential property at completion of sale. Measure both house prices and house price inflation based on the price paid for transacted properties. Have a UK coverage. Generate estimates (at least) monthly. Be timely with minimal revisions. Be available as a seasonally adjusted an unadjusted series. Provide a consistent index series to enable trend analysis. Provide robust sub-regional estimates and estimates for user defined areas. Provide comparable estimates for sub-sets of transactions or properties.

In addition they should … • Be accompanied by a clear explanation of the methods used to construct the statistics and indicators of the quality of those measures. • Provide a commentary of key findings and relationship to other house price statistics and housing market indicators, including those produced from non-official sources. • Be easy to find, view and download. • Seek National Statistic status.

How statistics measure up

Recommendations 1. A single definitive house price index and accompanying statistics should be produced by the official statistics producer community which meets the framework outlined. 2. A regular official statistics report should be developed presenting and analysing official house price measures and their relationship to other non-official sources and wider housing market indicators.

Next steps • Department for Communities and Local Government and Land Registry will report back to the National Statistician • The National Statistician will publish a statement prior to Easter 2011 on how this issue will be taken forward • The National Statistician is reviewing wider housing market indicators that should accompany house price statistics

Questions ? emily. carless@statistics. gov. uk Link to report: http: //www. statisticsauthority. gov. uk/national-statistician/nsguidance-and-reports/national-statistician-s-reports/index. html